Poor Nov. industrial output figures - will Monetary Policy Council react?

Industrial output rose year-on-year 4.6% in November, less than the 6.4% expected by analysts, and showing a slower increase over October's 7.1% annual pace. Weak domestic demand was the main reason for the production slowdown. Analysts say that demand has shrunk due to high borrowing costs imposed by the Monetary Policy Council (RPP) fighting to curb inflation. The RPP has kept official rates at 19%-23% since August, allowing real borrowing costs to rise to some 10% as price growth has eased. Analysts now expect the RPP to lower rates by the middle of 2001 to boost output, after its restrictive policy slowed economic growth to 5.2% in the second quarter from 6% in the first. Such an action might take place even earlier. "However, I expect no change of monetary policy bias at this Wednesday's RPP meeting," said Dirk Woelfer, senior economist at Standard&Poor's MMS in Frankfurt. (Reuters) M.K.