RPP slash means interest rates are lowest in history

Economists agree that the RPP was frightened over pessimistic macroeconomic data, according to which GDP growth in Q1 dropped to 2.1% in 2005 from 7% in the corresponding period of last year. "The Council clearly showed that it cared about the condition of the economy," said Wojciech Kuryłek, chief economist with Kredyt Bank. The RPP believes that economic growth might be substantially lower than previously anticipated. "Weak economic growth, a small likelihood of growing inflation and the threat of negative consequences of the strengthening złoty justify further rate cuts," believes Stanisław Kluza, chief economist with BGŻ. According to estimates, thanks to the Council's decision, enterprises will save as much as zł.0.5 billion annually. "The interest rates cut will result in lowering the cost of servicing loans, as they are dependent on the WIBOR rate. Interest on consumer credits will drop with a delay," said Wojciech Kuryłek from Kredyt Bank. After the decision, the reference interest rate currently stands at 5%. (Rzeczpospolita, pp. A1, B1) M.M.