Monetary Policy and Inflation Dynamics: A Comparative Analysis of Pre- and Post-Pandemic Periods in Poland and in Selected Economies

Abstract

Goal – The study assesses the effectiveness of Poland’s monetary policy in curbing inflation between 2015–2023, focusing on post-pandemic structural shifts. It verifies the effectiveness of the National Bank of Poland’s (NBP) conventional (interest rates) and unconventional (QE) tools, considering the international context and the structural nature of inflation. Research methodology – The methodology relies on a Vector Autoregression (VAR) model and Granger causality tests on quarterly data (2015–2023). This quantitative analysis is deepened by insights from structural (DSGE) and agent-based (ABM) models, comparative analysis, and qualitative analysis of central bank communication. Score/results – Result Interest rate hikes effectively, though with a 4–6 quarter lag, limited inflation; a temporary ‘price puzzle’ was noted. QE’s impact on inflation was short-lived and marginal. External cost shocks were confirmed as the dominant driver of Poland’s inflation (structural models attribute 8–10 p.p. of the 16.1% peak to them). NBP’s policy was necessary to anchor expectations, but its effectiveness was limited by global factors. The analysis also revealed a “distributional trilemma”. Originality/value – The article combines detailed econometric analysis for Poland (VAR, Granger) with a broad international context and an in-depth analysis of transmission mechanisms under dominant external supply shocks. It integrates findings from VAR, DSGE, and ABM models to explain post-pandemic inflation dynamics.