Narodowy Bank Polski implements the monetary policy guidelines determined by the Monetary Policy Council. The basic goal of monetary policy is to maintain price stability.
Since 1999, NBP has been pursuing direct inflation targeting. Since the beginning of 2004, the continuous inflation target has been standing at 2.5% with a permissible fluctuation band of +/- 1 percentage point. This means that every month, annual CPI should be as close as possible to 2.5%.
Narodowy Bank Polski influences the level of inflation mainly by determining the official interest rates, which define yields on monetary policy instruments. In order to influence short-term interest rates on the money market, NBP uses modern monetary policy instruments, including:
- open market operations,
- credit-deposit operations,
- a reserve requirement.
By using the above mentioned instruments NBP strives to maintain such a level of interest rates in the economy, which would maximise the probability of achieving the inflation target.
More on monetary policy instruments »