Poland’s central bank stands by inflation target

Poland’s Monetary Policy Council fully retains its official policy target, understood as a direct inflation target at 2.5% with allowable deviations of up to 1pps either way, Poland’s central bank, NBP Governor Prof.Adam Glapinski said in a statement for Polish Press Agency.

“No changes have been made concerning the level and the interpretation of the inflation target,” Prof. Glapinski said. The goal was and is inflation “at the level of 2.5% with a symmetrical tolerance range of 1pps over the medium term.”

Governor’s statement counters the market interpretation of comments taken from the October policy briefing. Prof. Glapinski had rather off-handedly said that inflation was at target and, asked for clarification, had said “as long as we are in range, we are at target.”

A perfectly strict adherence to the 2.5% target would bear “significant costs for macroeconomic or financial stability,” Prof. Glapinski said in his latest statement of the council’s freedom to “flexibly” define a appropriate rate for the return towards the target, he said in his statement. Deviations from the central target are treated symmetrically, Prof. Glapinski insists on the council approach.

“In the inflation target definition utilized by the council, the symmetry of the tolerance range is very important, pointing to the very same treatment of deviations above target as below,” Prof. Glapinski said.

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