The inflation spiral in Poland must be stopped
22:58
In a market economy, the prices of goods and services are constantly changing: some are rising, others falling. However, we only talk about inflation when there is a widespread rise in prices and not with increases in only certain goods. For the first time in over 20 years, inflation in Poland exceeded 5 percent. Such high inflation primarily destroys the purchasing power of savings accumulated in banks or treasury bonds, which give record low and close to zero interest. If such a state were to be maintained in the following years, the Polish zloty would lose more than half of its present value in 13 years. The very fast rise in prices slowly seems to be a permanent phenomenon and remains unanswered by the central bank. Economists believe that in the fight against rising inflation, a lot depends on the mood of the public and convincing them that financial institutions will deal with the problem properly.
“We have a big problem with inflation in Poland. Of course, prices have started to rise all over the world but Poland has a special problem. Inflation is a very strange phenomenon – the moment we fear it the most, then it starts to rise the fastest. The more we believe that inflation will be high, the higher it becomes,” Professor Witold Orłowski, an economist, told eNewsroom.
“Currently, it is said that monetary policy is not maneuvering the rates or the money supply. First of all, it is the ability to shape inflation expectations. In short, in a country like Germany, even when inflation was slightly higher, everyone trusted the Central Bank. It was believed that this institution would not allow inflation to rise significantly. In Poland, the problem is slightly different. The National Bank has for some time been pursuing a completely different communication policy. We are now being made to understand that it does not matter whether inflation rises or not – because it is not a priority enough. That it is unconstitutional is one issue. The important point is that the best way to break the inflationary spiral is to convince us that the National Bank will take inflation seriously. Our belief that the Bank of Poland remembers its obligations and that it will fight against rising inflation is even of key importance to the whole matter,” Orłowski explained.
