Balcerowicz at NBP helm, questions of fiscal policy make rate cut unlikely

Former Finance Minister Leszek Balcerowicz was sworn in yesterday as the new president of the National Bank of Poland (NBP), replacing Hanna Gronkiewicz-Waltz. He joins NBP at a critical time when high interest rates are slowing down the economy, but uncertainties about fiscal policy make a rate cut decision difficult. For example, Rzeczpospolita has just learned that the Finance Ministry sold $400 million worth of U.S. Treasury bonds and immediately exchanged the proceeds into zloty at NBP. This means an increase of zl.1.6 billion in money supply, spurring inflation, said Boguslaw Grabowski of the Monetary Policy Council (RPP), suggesting that this will make a cut less likely. Uncertainties about the deficit of this year's budget are another reason for RPP's hesitancy to lower rates. The council will hold its next meeting, the first headed by Balcerowicz, on Jan. 24. (Rzeczpospolita, p.A1, Reuters) T.J.