Monetary Policy Guidelines for 2022

The document communicates monetary policy guidelines. The guidelines are formulated each year by the Monetary Policy Council and presented to the Sejm concurrently with the Draft Budget Act submitted by the Council of Ministers. It includes a description of the external and internal environment of the monetary policy, its goals and tools for its implementation.

In the Monetary Policy Guidelines for 2022 the Council has maintained the monetary policy strategy pursued by Narodowy Bank Polski […]. Price stability remains the main statutory objective of monetary policy. At the same time, monetary policy will be conducted in a way that helps maintain sustainable economic growth and financial stability.

NBP will continue to pursue the strategy of a medium-term inflation target at 2.5%, with a symmetric band for deviations of +/-1 percentage point.

The scope, manner and scale of using monetary policy instruments by NBP will take into account in a flexible way the determinants of monetary policy implementation, including in particular market conditions and economic consequences of the Covid-19 pandemic.

Main points of the Monetary Policy Guidelines for 2022:

• The medium-term nature of inflation target means that due to macroeconomic and financial shocks, inflation may temporarily deviate from the target and even run outside the band for deviations from the target.
• Each time inflation deviates from the target, the Council flexibly determines the desirable time necessary to bring it back to the target, as bringing inflation rapidly back to the target may entail significant costs to macroeconomic and financial stability.
• While taking monetary policy decisions, the Council considers the time lags in the transmission mechanism of monetary policy.
• […] monetary policy is conducted under uncertainty, in particular about future economic developments.
• Stabilising inflation at a low level is an important, yet insufficient condition to maintain balance in the economy, which, in turn, supports price stability in the long term. Imbalances in the financial sector may pose a threat to long-term price stability.
• Besides monetary and macroprudential policy, fiscal policy plays an important role in maintaining macroeconomic stability. A fiscal policy which mitigates the impact of economic shocks, while ensuring long-term stability of public finance, is necessary to maintain macroeconomic stability.
• In line with the adopted strategy, in 2022 monetary policy parameters, including NBP interest rates, will be adjusted to the economic situation so as to ensure long-term price stability and, at the same time, support sustainable economic growth and financial stability.
• In 2022, the scope, manner and scale of use of monetary policy instruments by NBP will take into account factors determining the conduct of monetary policy, in particular the economic fallout of the COVID-19 pandemic.
• Main operations will be the key instrument by means of which NBP will be striving to shape liquidity conditions in the banking sector, and consequently – the level of the POLONIA rate.
• The main objective of the required reserve system will be to enhance the stability of short-term market interest rates.

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About NBP
Narodowy Bank Polski is the central bank of the State and it is responsible for its monetary policy and price stability. The Bank’s functions are described in the Constitution of the Republic of Poland and the Act on NBP. NBP holds the exclusive right to issue the currency of the Republic of Poland. As the central bank, it does not provide accounts for the general public, or accept deposits from or extend loans to individuals. It acts as a banker to the State budget and public sector entities. NBP also holds and manages the foreign exchange reserves of the State. It functions as a banker to banks, creating conditions for the operation of the Polish banking system. Narodowy Bank Polski is also one of the most important research and analytical centres in the fields of economics and financial markets.