The article discusses four issues related to disinflationary processes in countries under transformation: (1) disinflation advantages and related costs; (2) disinflation in selected countries; (3) disinflation strategies, and the role of monetary and exchange rate policies; and (4) the role of fiscal policy.

High inflation threats economic growth perspectives, distorts public finances and causes numerous social pressures. With disinflation some of nuisance disappear, replaced, in turn, by short-term costs related to coping with nominal downward rigidities. Equally active disinflation creates favorable conditions for the economic growth in medium- and long-term perspective.

Disinflation in countries under transformation has been achieved at a different pace and not always consequently. Against the background of other countries Poland reflects slow, however, systematic pace of disinflation. An important role in determining the pace of disinflation is played by the exchange rate policy. An exchange anchor, unless supported by adequately restrictive fiscal policy, may, however, lead to the balance of payments crisis. Excessive budget deficit, irrespectively of its financing sources, makes disinflation difficult or even impossible. An independent central bank that adopts a firm anti inflationary approach may, however, force fiscal authorities to pursue more disciplined policy.