Industrial output falls in June increasing pressure for an interest rate cut

Industrial output was sharply down in June, putting pressure on the Central Bank's Monetary Policy Committee (RPP) to cut interest rates. Year-on-year output plunged 4.8%, on the heels of a 0.9% fall in May, according to figures from the Central Statistical Office (GUS). This was the first time since February 1999 that output had fallen in two consecutive months. Analysts had been predicting a June fall in industrial output, but only of 1.6%. "We were expecting a very weak number, but this one is even weaker," commented Juliet Sampson, with Bank of America in London. June also saw a fall in producer prices, of 0.4%, which in the opinion of analysts is likely to put added pressure on the RPP to cut interest rates. According to Sampson, "I would not rule out a move in the RPP's policy this month, but it's probably a long shot. Producer prices have been falling very sharply, price pressures are very weak, and it can only weigh in favor of easing at some point in the next few months." The latest industrial output and producer price figures are expected to form part of the basis of the discussions of the RPP's two-day meeting, which begins today. (Reuters)