chapter  7
Pages 18

The NBP has used its lending rate to the commercial banks as an important tool of monetary policy. Before 1996, the central bank’s lending rates consisted of: the rediscount rate, the Lombard rate and the refinance rate. However, as of early 1997, the refinance rate ceased to be one of the lending rates. As an example, as of 17 July 1997, the lending rates were: rediscount rate (22 per cent) and the Lombard rate (25 per cent). Our simulations are intended as a means of examining rather broad issues here: What are the consequences of reducing the discount rate on some of the main macro variables?