Monetary council moves from restrictive to neutral, no interest rate cut soon

The Monetary Policy Council (RPP) yesterday decided to relax its monetary policy outlook from restrictive to neutral, a move welcomed by economists. The decision was based on the decreasing inflation level and controlled increase in money supply, said National Bank of Poland (NBP) president Hanna Gronkiewicz-Waltz. "We cannot predict for sure when the interest rates will be cut, but if nothing bad occurs in the economy, it can be done next year," said RPP member Dariusz Rosati. "I'm very happy with the RPP decision, but it is virtually impossible for interest rates to be lowered at the beginning of next year. It's more likely to happen at the end of the second quarter of 2001," said Stanislaw Gomulka from the London School of Economics. According to CDM Pekao S.A. analyst Iwona Pugacewicz-Kowalska, given the present and predicted level of inflation the Council may lower rates by about 1-1.5-percentage points. "The biggest problem in the Polish economy is unemployment and without adequate fiscal policy, fighting the problem may be tough. In such situation the RPP cannot decide for increasing unrest in the economy so the rates will not be lowered yet," said RPP member Grzegorz Wojtowicz. (Gazeta Wyborcza, p.20) M.M.