The conclusions of the ECB’s report is that establishing an environment that favors a steady convergence requires policies aiming at economic stability, as well as wide structural reforms. This statement holds regardless of whether we will adopt the Euro or not.
When we face serious problems, such as economic crises, the people, at least in France and Spain, prefer to leave the government in calmer hands – perhaps less charismatic, but better prepared.
One of the debates which has intensified recently is to what extent is lax monetary policy causing the increase in the price inflation.
The 20th anniversary of the euro was marked by an increase in price inflation. In the euro area, annual consumer price inflation reached 5% in December 2021. Lithuania recorded the highest rate of 11%.
The war in Ukraine will affect Poland’s socio-economic situation through many channels both in the short and long term. In the near term, we face weakening economic growth and even higher inflation, even double-digit inflation.
In response to Russia’s invasion of Ukraine, the Polish Law and Justice government began to work on creating two new funds in the state-owned Bank Gospodarstwa Krajowego to finance “systemic aid” and additional military spending.
The US Federal Reserve System (Fed) has announced that it will raise interest rates. They have been at zero since the start of the pandemic and since the last recession in 2009, they hit their highest level in 2019. But even in 2019, they were very low, with an effective rate of about 2.5%.
The inflation in Hungary is just as bad as it is in the rest of Europe: in 2021 the rate of the inflation was 7.4%, which was a 13-year-old record. It is a logical step from the government that they want to reduce its level and want to moderate the prices.
Inflation is often referred to as a tax, imposed without parliamentary approval, without legislation and without considering the consequences. Today’s inflation is special: printing money seemed to be pretty much the only way to respond to the pandemic and to finance rising public spending.