Monetary Policy Council makes conservative cut in interest rates

The Monetary Policy Council (RPP) lowered the lombard and rediscount i nterest rate by 1 percentage point and the intervention rate by 0.5 pe rcentage points yesterday, bringing the central bank's key open market intervention rate into single digits, 9.5%, for the first time ever. A lthough just two days ago analysts firmly believed this would be the last interest rate cut this year, the zloty strengthened after yesterday's decision, in anticipation of yet another reduction in the near future. Following yesterday's announcement, both Prime Minister Leszek Miller and Finance Minister Marek Belka expressed disappointment that RPP did not cut rates further. Meanwhile, Marek Sawicki, deputy head of coalition member Polish Peasant Party (PSL) said ironically "We are glad, as the decision of the RPP is creating a good atmosphere for amending the law on the National Bank of Poland (NBP), [which would mean adding six new members to the RPP]". (Gazeta Wyborcza, p. 19) T.J.