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September 18, 2020
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We are facing higher inflation, which we do not have to fear – says Dr. Wojciech Paczos |

Wojciech Paczos from Cardiff University in an interview with Bankier.pl he stated that the prices of products and services on the market will continue to rise, but we do not have to worry about it in any particular way. The higher inflation that awaits us should be acceptable. Surprised? But why is the expert of this opinion? He explained this later in the interview.

There is higher inflation ahead of us

Over the next two years we will have to deal with higher inflation in Poland – says Dr. Wojciech Paczos from Cardiff University.

We all know it already. Should the NBP do something about it? The expert is of the opinion that it is not. – In order to bring down inflation using classical methods, you need to curb the demand. And this in the present situation of the Polish economy would be a fatal, gigantic and dramatic mistake in economic policy – He said.

The NBP is still advising what it should do now.

We have a very bad situation, during which the NBP should not raise interest rates, because that would mean limiting the already weak demand. In the current Polish situation, an increase in interest rates that would cause a decline in GDP and an increase in debt would be a greater threat to financial stability than rising inflation. We know from research that the threat is double-digit inflation, then it completely slips out of control. For now, I do not see any threats that inflation in Poland will exceed 10 percent. In contrast, single-digit inflation is liveable and manageable – adds the economist.

Why shouldn’t we worry?

The expert also claims that the last NBP policy from the beginning of the crisis was necessary. Only it increased the state’s debt. Obviously, higher inflation is now in the interest of the state, as it kind of reduces this debt. However, the problem arises when we look at the micro sphere and the situation of Poles with greater savings. The latter will now in practice be melted, as the Polish zloty will probably continue to depreciate.

For now, we are not really threatened with inflation of over 10%. The question is what will happen in 2-3 years. Certainly, the more forward-thinking are already investing in safe haven …

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