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Monetary Policy in Poland Essay

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Monetary Policy in Poland

Economic policy is the pull of operation which government of the specific country take in order to influence the economy and the current situation of the nation. It is believed to be one of the most important tools which prime minister and his team of ministers own to have control over the national economy. One of the spheres of which economic policy consists is monetary policy. It is included to macroeconomics policy as well as fiscal and budgetary policy.

First of all, it is essential to understand the meaning of the word- monetary policy, which will enable to comprehend many processes concerning stimulation of the economy. Monetary policy involves open-market operations , reserve requirements and changing the short-term rate of interest (the discount rate). It is one of the two main tools of macroeconomic policy, the side-kick of fiscal policy[1]. It controls the value of currency by lowering the supply of money to control inflation and raising it to stimulate economic growth. It is concerned with the amount of money in circulation and, consequently, interest rates and inflation[2]. The main goals of the policy are to secure the full employment across the country, to keep stable prices and to stimulate the long-term interest rates. The monetary policy is conducted by the government and the central bank who work together to acquire the best possible consequences for the nation economy. However, it is not easy or quick to implement new regulations or obligations within monetary policy. It takes time for some features of the economy to adjust to new strategy. Although financial markets react quickly to changes in this policy, it takes usually months or even years for such a policy to affect or influence employment and economic growth. Therefore it is advisable for governments to act on a long-term view and to make policy adjustments based on forecasts and actual data concerning present inflation, interest rates or unemployment....

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