RPP members support further interest rate cuts

Some members of Poland’s Monetary Policy Council (RPP) were in favor of further cuts in interest rates, in order to counteract the negative impact of low inflation figures, according to official minutes of the latest RPP sitting. “A few Council members pointed out that interest rate decrease could be necessary in the near future,” the minutes read. “Those members were of the opinion that present interest rates level under current macroeconomic developments could deepen deflation.” The Council agreed that decisions in the coming months should depend on the incoming data about further economic recovery and inflation in the medium term. RPP members were split, however, on whether negative inflation would prompt consumers to postpone consumption or have the opposite effect by increasing their purchasing power. In July CPI stood at -0.2 percent year-on-year. RPP expects the inflation figures to increase towards the end of the year. At its August sitting, the Council maintained the current level of interest, with the reference rate at 2.5 percent, citing the ongoing economic recovery.