RPP cuts interest rates by 25 points

The Monetary Policy Council (RPP) cut interest rates by 25 basis points yesterday, saying record low inflation and a weak recovery allowed it to ease its main rate to 6.5%. All analysts polled by Reuters had expected the move, as part of the RPP strategy of incremental easing. The cut brought Poland's rates in line with those of Hungary. "We maintain our diagnosis of a gradual recovery in our economy, but there is a considerable area of uncertainty, despite all that is going on abroad," RPP Head Leszek Balcerowicz said. He highlighted slack domestic demand, stagnation in the German export market, uncertainty resulting from the Iraq crisis and falls in both headline and core CPI figures for December. "The significant thing is what he didn't say. Last year, he said a couple of times that rates were at, or near, their appropriate level," said Gavin Gray, of HSBC in London. (Reuters, Puls Biznesu, p. 2, 6, 7) M.M.