At a time when many central banks conduct a monetary policy based on near-zero or negative policy rates, expectations — not only of future interest rates, but also inflation — are playing an increasingly significant role. Central bankers want to affect consumers’ inflation expectations.
The economy needs inflation. Striving for optimal inflation means striving for economic growth. The ECB is struggling to meet its inflation target and there is nothing more to resort to if the recession finally comes, says Prof. Klaus Adam.
Low fertility and increasing life expectancy in most of the world's economies are causing a decline in the natural interest rate. Too restrictive monetary policy may increase the risk of the economy falling into a deflationary trap.
Changes in short-term interest rates have a significant impact on the economy, but the size of this impact is curbed by a relatively small role of credit as a source of financing for Polish enterprises.
The economists cooperating with the European Financial Congress predict that the period of boom in the Polish economy is already past its peak and that the rate of growth will drop from 4.5 per cent in 2018 to less than 3 per cent in 2021.