NBP Governor for “Gazeta Bankowa”

The “Gazeta Bankowa” monthly has published an interview with Prof. Adam Glapiński, NBP Governor, entitled We will not let higher inflation gain a foothold.

“In 2020 we faced an unprecedented shock to the economy – both at home and abroad – caused by the outbreak of the pandemic. At that time, NBP took many decisive, swift measures in order to mitigate the economic effects of COVID-19 to the greatest extent possible, i.e. in the first place to protect jobs, prevent bankruptcies of companies, and maintain the stability of the financial system. The government’s anti-crisis programmes directed at enterprises and households, whose launch was supported by the activities of NBP, had similar goals. As a result, Poland handled the crisis very well. The recession in our country was relatively shallow and short-lived, and unemployment hardly increased at all, making it among the lowest in the European Union. Consequently, it was possible to quickly make up for the pandemic losses, and our GDP already exceeded the pre-pandemic levels in the second quarter of this year, which is something many European countries haven’t yet managed to achieve. Overall, we have been able to protect the incomes of Poles and Polish companies, paving the way for the continuation of Poland’s economic development in the coming years. In this way, we also supported the stability of the financial system.”

“[…] inflation has increased in most countries, including the world’s wealthiest ones such as the United States and Germany, reaching the highest levels in several decades. […] we took decisive measures in order to reduce inflation. We have already raised interest rates twice and we will pursue further action if necessary. Just as we were determined to protect the Polish economy during the pandemic, we will not let higher inflation gain a foothold. Of course, we will do this while also ensuring sustainable growth in the economy. We should keep in mind that inflation will remain elevated until the first quarter of 2022, because – as I’ve said – it is currently being boosted by increases in the global prices of fuels and commodities, a spike in gas prices in Europe, the effects of the EU climate policy influencing electricity prices, and by various other factors. However, our actions will prevent these shocks from increasing inflation permanently. As a result, after several quarters inflation will start to decline.”

“When it comes to private investment, NBP follows it closely as part of the ongoing monitoring of the enterprise sector. We are seeing a clear rebound in corporate investment after the pandemic. In the third quarter of this year, the general index of investment optimism among the surveyed companies increased for the fifth quarter in a row and is now close to the levels recorded during the peak of the last investment cycle in 2018. According to the latest NBP projection, the value of enterprises’ gross expenditure on fixed assets will exceed the levels recorded before the outbreak of the pandemic as early as the beginning of 2022.”

“The planned transfer of the contribution from NBP’s profits to the Armed Forces Support Fund is, in my opinion, the right decision and I’m very happy about it. The central bank’s profit is the income obtained mainly from the management of the NBP reserves, which are classified as national assets. Meanwhile, national defence is one of the most essential functions of the state. […] this will require statutory amendments […]. Such an amendment – if adopted – will not affect the principles relating to the generation of this profit. Just as before, NBP will strive to effectively manage its reserves and costs, which should enable the maximization of the financial result.”

“[…] Poland’s security is the basic condition for economic stability and prosperity.”

“A shift towards nuclear power is inevitable and necessary. Poland can afford to finance the construction of nuclear power plants, and NBP is ready to indirectly support such activities, of course, within the confines of the instruments at our disposal. In the long term, this is also consistent with the mandate of the central bank, i.e. with the goal of maintaining medium-term price stability, because limiting energy price increases will be conducive to lower inflation.”

“[…] the European Union’s climate policy is a burden on the competitiveness of European industry, in particular on the international stage. On the other hand, from the perspective of the central bank, one additional important consequence of that policy is its impact on inflation. The proposed changes mean that in many years to come, these carbon footprint taxes will be driving up prices, which from our point of view will constitute a long-term negative supply shock. Any actions taken in the coming years should be well-considered so as not to overburden the economy and the people with the costs of the energy transformation.”