Weak zloty does not reflect economic reality - RPP

Monetary Policy Council (RPP) member Boguslaw Grabowski said yesterday that a weak zloty was not reflecting economic fundamentals, but uncertainty over its direction in future could limit scope for rate cuts. "It is mainly caused by global worries over a possible war in Iraq and domestic unce rtainty resulting from the coalition breakdown," Grabowski told Reuters. Another member, Dariusz Rosati, said he expected the weakness of the zloty to be short-lived. "There is room for recovery in the medium term," said Rosati. Cezary Jozefiak, another Council member, said he did not expect the loosening of monetary conditions caused by the zloty's depreciation to have any impact on the panel's interest rate policy. "I think it is a temporary matter. The weakness of the zloty won't have any influence on interest rates, because we are taking a long-term strategic approach," he said. (Reuters) M.M.