Balcerowicz hints at no interest rate cuts and urges financial system reforms

Governor of the National Bank of Poland (NBP) Leszek Balcerowicz suggested yesterday that the Monetary Policy Council (RPP) would not lower interest rates in the wake of cuts by the US Federal Reserve and the European Central Bank. "Direct translation of the Fed's decision into the Polish situation would be a mistake," he said. Balcerowicz stressed, however, that the impact from last week's deadly attacks on the United States could increase uncertainty chiefly for local markets. The Warsaw Stock Exchange (WSE)'s key WIG 20 index fell to levels unseen in 34 months yesterday, as investors dumped nearly all Polish blue chips due to fears of a lack of stability on emerging markets. In other comments, Balcerowicz called on the government to provide a reliable solution to the difficult budget situation by taking on the essential state financial system reforms that would prevent any long-term foreign capital outflow. "Any increase in uncertainty in the future could lead to a higher degree of caution among foreign investors, and if we want to keep those inventors we need to resolve the budget problems," Balcerowicz said. (Gazeta Wyborcza, p. 15; Reuters) M.T.