CONTROVERSY OVER THE INTEREST RATE THEORY AND POLICY. CLASSICAL APPROACH TO INTEREST RATE AND ITS CONTINUATIONS.

Interest rate policy is one of the oldest and at the same time most controversial tools with which central bank affects the economy. In fact, it comes down to the central bank initiated changes in the levels of the so-called official interest rates (discount rate, rediscount rate, lombard rate, and others) or influencing the market interest rates through open market operations. A frequent paradox which appears in the historical approach to interest rates is questioning of the causative role of interest rate changes introduced by central banks with reference to dynamics of the so-called real sphere as well as frequent use of this stabilization instrument. In the last few decades, several turnabouts occurred in economic policies (especially, monetary policies) of the industrialized countries. Each time, a new interpretation of interest rate policy was responsible for that [Bednarczyk, 1990, Hubbard, 2002]. One of the trends which appeared in the discussion was an attempt to return to classical roots of the interest rate theory. The concept of the natural rate of interest became the focus of attention. This paper refers to this concept and is an attempt to present the author’s own interpretation of it. The final part of the paper presents a study case of the natural interest rate policy of the National Bank of Poland (NBP) in the years 1999-2003. It shows that finding an optimum rate of interest in the transforming economy can be even more difficult than it appears from purely theoretical discussions