RPP leaves interest rates unchanged as złoty strengthens and wages drop

According to the latest forecast, inflation should float between 2.5-5.2% at the end of 2005 and 1.3-4.8% in 2006. The Council pointed at strong domestic currency, which is negatively affecting GDP growth, but at the same time helps to cope with the CPI. According to the RPP, economic growth will be lower than anticipated in Q3 - below 5%, which is mainly due to a lack of investments. Members of the Council also mentioned dropping real wages and a very high unemployment rate. "Over the longer term, the biggest risk is related to the lack of reforms healing public finances," said RPP chairman Leszek Balcerowicz. The Council is likely to increase interest rates further next year. (Parkiet, p. 7) M.M.