The speech, which was shown by TVP Info, was made on December 1, 2021 during the award ceremony. Władysław Grabski. Importantly, the NBP president stressed several times that what he was saying was not his private opinion, but the position of a “constitutional body”.
– What I am saying is the position of the National Bank of Poland. I am one of the three authorities that have the right and obligation to publicly present the bank’s position (…). I say this on behalf of the NBP management board, or on behalf of the Monetary Policy Council – said Glapiński and explained that when he loses the vote in the MPC, he presents an opinion that was originally contrary to his idea.
– I’m changing my rhetoric. Inflation is not temporary, but burdensome, and we will try to bring it to the minimum levels, said the President of the National Bank of Poland and explained that at least until the end of the first quarter of 2022 we will be dealing with high inflation. It is to remain elevated until the end of next year, and it should fall in 2023. At the same time, he made a reservation that it would still be outside the upper range of deviations in the projections.
At the same time, he reminded that the decision to raise interest rates will not lower the current inflation, but is intended to counteract the possibility of the so-called second round effects.
– This is aimed at a few quarters ahead when side effects may emerge. Current inflation can be influenced by fiscal policy by reducing taxes, which is what is happening now. But this is not a free lunch, it means less budget revenues, less money for expenses – said Glapiński.
Adam Glapiński also pointed out that the current inflation is largely caused by external factors. He mentioned the actions of China, the “party” played by Vladimir Putin around Nord Stream 2, rising freight prices and more expensive CO2 emission allowances, which, according to the NBP president, should be suspended for the duration of the post -andemic crisis.
“Liberalism slashed with an ax” vs care for the labor market
The NBP president also allowed himself to criticize some economists calling for interest rate increases. He compared them to dinosaurs and stated that they represented “ax-sliced liberalism.”
– There are economists who say you have to raise rates, but they never thought of lowering rates. The switch is screwed on and it doesn’t change. Theoretically, there is a level of interest rates that would stop this inflation, but then unemployment would be at 50%, the economy would shrink rapidly, entrepreneurs would sell below production costs, but inflation would start to fall, the NBP president discussed theoretically.
The topic of unemployment appeared in Glapiński’s speech several more times. The President of the NBP noted that among the statutory and constitutional duties of the central bank in Poland, there is no concern for the level of employment (this is the case, for example, in the USA), but in his opinion “the legislator does not have to write something like a healthy sense”.
– Narodowy Bank Polski must take care of the strength of the Polish currency, the Polish zloty, but within reason, cooperating with the fiscal authorities – he added and a dozen or so minutes later admitted that “we cannot allow unemployment, because it would be destruction”.
– We in Poland have such views that the economy should be quite solid, that we will not let people sleep under the bridge (…) The economy is for people – he said. He also argued that “Narodowy Bank Polski must take care of the strength of the Polish currency, the Polish zloty, but within reason, cooperating with the fiscal authorities. “
At the same time, Adam Glapiński allowed himself to notice that the central bank as an institution “is a contradiction of the free market”. – A free market would order the crisis to develop, the masses of the unemployed to emerge, and then everything to recover – he explained.
And again about the economic miracle
The NBP president once again spoke about the “economic miracle” of Poland. He admitted that his repeated thesis had been criticized many times, but he upheld it.
– If someone questions the economic miracle in Poland, let him show another country that has such results (…) We are getting closer and our competitors feel our breath on their necks – argued Glapiński, and among the countries that are supposed to feel this breath, he mentioned incl. Italy. As he added, even high inflation is not such a significant problem in this case, as it is faced by the whole world.
– Poland’s situation is very good, I will say it again, even with this inflation. This is not hyperinflation, this is not superinflation, this is elevated inflation. Poland’s situation is very good, the best economic situation since the partitions – said Glapiński and added that next year it will fluctuate between 4.5 percent. and 5.5 percent