Inflation forecasts promising, but RPP under pressure to cut interests rates

Economic indicators appear to signal that there is room for a cut in interest rates, but the Monetary Policy Council (RPP) could abstain from making such a move today as it wants to fight off political pressure. Analysts are certain that inflation will fall to another post-communism low of around 2.5%, with the Finance Ministry forecasting inflation as low as 2.2%. Industrial output figures were yet again below expectations, while employment continues to shrink. However, as Parliament is discussing drafts of amendments to the law on the National Bank of Poland (NBP), analysts say the RPP could refrain from lowering rates, feeling that its independence is under threat. (Zycie, p. 8) T.J