RPP cuts rates by 25 basis points to 6.75% - zloty remains strong

The Monetary Policy Council (RPP) has cut the main market rate to 6.75%, say ing benign inflation and a slow recovery from the worst economic slump in a decade allowed the move. It has now been trimmed by 475 basis points so far this year. Most analysts had expected some policy easing but those who thoug ht the central bank's RPP would try to stem recent zloty strength with a dee per cut were disappointed. It was the eighth cut this year, but the first ti me the RPP trimmed by just 25 basis points, and it leaves the differential b etween Polish rates and inflation of 1.1% at the highest level among EU memb ership candidates in Central Europe. The central bank made it clear that its primary focus remained fighting price growth, not tackling currency strength . "Zloty volatility is to some extent a natural phenomenon in a free-floatin g regime. Rate levels are not the only factor influencing the exchange rate ," National Bank of Poland (NBP) governor Leszek Balcerowicz told reporters. "Short-term currency volatility is not a sufficient reason for monetary deci sions," he added, reiterating his view that scope for more cuts was limited since inflation has stabilized. (Reuters) A.Z.