
Appreciation is not enough in the fight against inflation
The Bank of Poland takes its main rate to 4.5%, projecting 6.5% this year and 7.5% in 2023. Meanwhile, companies are passing higher costs on to CPI.
The Bank of Poland takes its main rate to 4.5%, projecting 6.5% this year and 7.5% in 2023. Meanwhile, companies are passing higher costs on to CPI.
The conflict in Ukraine has created another excuse to blame inflation on oil and natural gas, rather than the increase in the money supply.
Household consumption will keep sustaining the Polish economic growth o\in 2022, and high producer prices will be passed on to final consumers.
The Latvian economy already returned to its pre-pandemic level in 2021, only thanks to household consumption, wage growth and savings.
In Lithuania, the inflation rate reached around 11% in early 2022, and heating bills are expected to increase by 50% to 60%.
Following a record GDP growth (8.5%) in 2021, the Estonian economy will slow in 2022, still maintaining a strong pace (+4%).
GDP and consumption booms continue, but price-wage spiral too, as consequence of expansionary economic policy in recent years.
Riga is facing multiple challenges: energy prices, increasingly unemployed, a domestic market fall, global supply chain disruptions.
The example of Estonia suggests that the focus on an efficient allocation of resources works more effectively than a stimulus of demand.
NBP action lags behind other CEE central banks, while authorities pretend the elevated CPI to be a result of external supply shocks.