Banks respond to RPP rate cut with lower interest on deposits and loans

Poland's leading retail bank, state-owned PKO BP, has announced a cut in interest rates on deposits and loans by an average of 1.5 percentage points. The bank will keep interest on current accounts unchanged, while slashing rates on loans to small and medium-sized businesses by as much as 2 to 3 points. The decision, which follows last week's interest rate reduction by the Monetary Policy Council (RPP), indicates a clear change in response by the banking sector. Following similar decisions by the RPP in the past, banks usually reacted by reducing interest on deposits faster and more dramatically than on loans. Another state-owned bank, Bank Gospodarki Zywnosciowej (BGZ), announced earlier that as of February 1 it was cutting rates on deposits and loans by an average of 1.6 points. (Prawo i Gospodarka, p. 7; Gazeta Wyborcza, p. 22) T.J.