Central bank sees GDP boosted by 1.1 pps by loosening monetary policy

Paweł Supernak/PAP

Loosening monetary policy in 2020 should boost Poland’s 2021 GDP by 1.1 pps and CPI by 1.0 ppt, central bank NBP has said in an annual report.

"NBP analysis indicates that loosening monetary policy in 2020, including mostly NBP interest rate cuts together with bond purchases... contributed to reducing the scale of GDP decline by 0.3 ppt and hiked inflation by 0.3 ppt," NBP said.

The NBP’s monetary policy maintained inflation at a level consistent with the NBP's inflation target (2.5 percent +/- 1 percentage point) in the medium term. Inflation of prices of consumer goods and services in December 2020 amounted to 2.4 percent year on year and throughout the year it amounted to an average of 3.4 percent.

The NBP pointed out that its actions in 2020 - by having a positive impact on the financial situation of borrowers - also limited credit risk, whose increase was the most important factor of the pandemic's impact on the stability of the banking system.