RPP likely to lower interest rates, but will retail banks follow suit?

Today the Monetary Policy Council (RPP) is likely to lower interest rates by 50 base points for the third time in a row, and for the third time the reaction of the high street banks will probably be only to lower the interest rates on deposits, not on loans. Politicians blame the RPP for keeping interest rates high, which they argue, have impeded economic growth, increased unemployment and overvalued the zloty and so making exports uncompetitive. Yet the government, which diverts capital from the market to reduce its nearly zl. 40 billion budget deficit, is also responsible for the economic slump. Having the state as their debtor, the banks are less interested in giving loans to individual clients or companies. The situation on the deposit and credit market is likely to become more stable once Poland enters the European Union. Then, it is believed, that once new institutions arrive together with new possibilities of taking loans or opening saving accounts abroad, domestic financial institutions will be forced to become more competitive. (Puls Biznesu, p. 18) K.S.