Increased economic activity threatens deep rate cuts

Monetary Policy Council (RPP) member Cezary Jozefiak has been reported as saying that deep interest rate cuts would be dangerous due to inflationary pressure that could increase because of budget borrowing and an expected rise in economic activity later this year. In a response to whether this year's budget created conditions for a rate cut, Jozefiak said, "No. Whatever good is said about the budget, its deficit is still at five percent of GDP this year - the same as last year's catastrophic level." According to this week's Reuters census poll, 14 of 18 analysts expect interest rates to be lowered by between 50 and 100 basis points at the April 23-24 RPP meeting. (Reuters) A.K.