Belka warms of deflationary imbalance and not inflationary pressures

Finance Minister Marek Belka said that Poland is facing a deflationary imbalance and with the budget under control and inflation likely to be below 4% by the end of the year, there is plenty of room for the Monetary Policy Council (RPP) to lower interest rates. Belka was addressing a meeting of the Parliamentary Public Finance Commission with the presence of senior National Bank of Poland (NBP) officials whose views on the economic situation differed. NBP vice-president Andrzej Bratkowski replied that Poland actually faced a macroeconomic imbalance in 1999-2000 when GDP growth was high, but the current account deficit was reaching dangerous levels. This could have led to a currency crisis, which in order to avoid, was necessary to tighten monetary policy. RPP members Cezary Jozefiak and Grzegorz Wojtowicz stressed that the Council's caution in cutting interest rates stems from its long-term approach to the issue. (Prawo i Gospodarka, p. 8) T.J.