Conducting credit and deposit operations allows limiting fluctuations in interest rates on the money market Monetary policy strategies and the economy How can the NBP act to ensure price stability and counteract the negative effects of business cycle fluctuations? Inflation targeting strategy Its basis is to set and announce to the public a specific inflation target, which at the moment is approximately . %. In this way, it is possible to keep the prices of goods and services stable and to establish certain inflation expectations that influence future consumer actions.
Moreover, it forces a given country to operate a floating exchange rate system, which depends on changes in supply philippines photo editor and demand. There are two approaches to this inflation targeting strategy - rigid and flexible. The first one focuses on achieving stabilization without having a very narrow range of inflation rate deviations. This therefore requires frequent amendments and changes to the state's monetary policy. However, the second mentioned option allows for greater freedom in relation to inflation deviations.
This allows for more reliable observation of the market situation and drawing conclusions to develop a long-term action plan for the coming years. The inflation targeting strategy has been used in Poland since . It allows for a flexible approach to managing the state's economy, stable development and smooth exchange rate development. Restrictive strategy Its goal is to limit the money supply in market circulation, which is the effect of growing public debt.
