Drop in inflation sparks debate of interest rate cut by RPP before year end

"The first possible changes are expected in the first quarter of next year," said Piotr Zagala of Pioneer Polski Dom Maklerski S.A. brokerage. However, other experts say that disinflation in July should have a very positive outcome for interest rates. The year on year inflation rate fell from 6.5% in June to 6.3% in July. "This information [July disinflation] increased chances that the RPP will still cut the rates this year," said Zsolt Papp of SBC Warburg in London. Analysts also noted that good inflation results signal against rate hikes. "It means that the central bank may reach its inflation goal," said Andrew Kenningham of Merill Lynch. "And that means the rate hike is not needed," he added. (Prawo i Gospodarka, page 1, Reuters)