Analysts say interest-rate cut possible, but dependent on low budget-deficit

Monday's surprisingly positive current-account deficit news has led many analysts to believe there is a chance the Monetary Policy Council (MPP) will lower interest rates. This will not be possible if the Finance Ministry allows too high a budget deficit for next year. "Foreign investors fear the government will succumb to populist pressure and loosen fiscal policy," says ABN Amro analyst Pawel Sadalsk, adding "Then there will be no chance to lower inflation and the current account deficit." American investment-bank Merrill Lynch says the probability of an interest-rate cut this year has increased and predicts the current-account deficit will no longer be a threat, but low inflation is a prerequisite for an interest-rate cut. (Gazeta Wyborcza, page 21) T.J.