Balcerowicz dampens expectations of further quick reductions after rate cut

The Monetary Policy Council (RPP) yesterday announced a 1.5 percentage point cut in interest rates. Commenting on the decision, Governor of the National Bank of Poland (NBP) and RPP head Leszek Balcerowicz pointed out that this is the sixth reduction this year and that no further changes should be expected soon. He stressed that the results of previous cuts are not fully apparent yet and that what impact the new tax on bank deposits will have is still unknown, all of which makes the RPP reluctant to act again for some time. Giving the reasons behind the decision to cut rates, Balcerowicz made particular mention of the lower level of inflation, both real and anticipated. Other factors included the weak credit dynamics, and optimistic predictions for oil prices. Rzeczpospolita quoted Prime Minister Leszek Miller as saying, "This decision is a step in the right direction. I hope further reductions will take place soon." (Rzeczpospolita, p. B1) M.K.