The effects of the National Bank of Poland’s policy during the COVID-19 pandemic

Abstract

The study aims to identify and assess the effects of the policy pursued by the National Bank of Poland (NBP) during the COVID-19 pandemic. The assessment covers the effects of monetary policy observed in 2020–2023. The research was conducted using deduction, verbal logic, and an analysis of the dynamics of the categories studied. During the pandemic, the NBP changed its expansionary policy to ultra-expansionary. The main actions were lowering interest rates and purchasing securities as part of structural open market operations. The positive consequences of such a policy were an increase in global demand and production in 2021–2022 and a persistently low unemployment rate. At the same time, there were many negative effects. The most important was the emergence of high inflation, with all its economic and social costs. For households, the long-lasting negative real  interest rate and the decline in average real wages in 2022–2023 were particularly costly. Not only did CPI inflation increase, but also core inflation. This means that the NBP’s actions significantly contributed to strong price growth in Poland. The consequence of the NBP’s ultra-lenient policy during the pandemic was also the Cantillon effect. Such a policy contributed to the division of society into winners of these changes and losers, the latter being mainly consumers.