Download Macroeconomic environment of business activities

Macroeconomic environment
of business activities - 4
Dariusz Filar
Monetary Policy
The main goal of the monetary policy is
achievement of price stability – that is
inflation so low and stable over time that is
does not materially enter into the decisions of
firms and households.
Inflation targeting
Inflation targeting is a monetary policy strategy
in which the central bank makes a public
commitment to achieving an explicit inflation
target.
Inflation targets differ in varous countries but a
typical target range is between 1 and 4 per
cent.
Monetary Policy
The tightening cycle –
Central Bank raises its
main reference rate
The easing cycle – Central
Bank lowers its main
reference rate
Monetary Policy Transmission (1)
1) Central Bank raises/lowers its reference rate
2) Next day other short-term interest rates
rise/fall
3) Few months later supply of loanable funds
decrease/increase
4) Few months later the long-term real interest
rate rises/falls
Monetary Policy Transmission (2)
5) Up to a year later consumption, investment
and net exports decrease/increase
6) Up to a year later aggregate demand
decreases/increases
7) About a year later real GDP growth rate
decreases/increases
8) About two years later inflation rate
decreases/increases
Inflation target, inflation rate and reference rate in Poland
7
6
5
4
CPI
Inflacja bazowa(żyw/ener)
3
Stopa referencyjna NBP
Górna granica odchyleń
Cel inflacyjny
2
1
0
-1
Dolna granica odchyleń