Warsaw (Puls Biznesu) – Economists believe, the Monetary Policy Council (MPC) may lower interest rates at the meeting on March 29th. The main reason is expected CPI fall. Miroslaw Gronicki, the Minister of Finance, expects it to fall to around 1.5 percent in the middle of the year. Jacek Wisniewski, the head of market analyses and forecasts in Pekao bank believes that the inflation will be below 2 percent at the end of the year. Slower economic growth is another reason to cut rates. In the first quarter of 2004, GDP dynamics amounted to 6.9 percent, while in the fourth it fell to 3.9 percent.
‘We expect two decisions to lower rates, 25 base points each, in March and April. If Polish currency zloty remains strong and stabile, till the end of the year, the rates may fall by 50 base points more. At the end of this year, the referential rate will amount to 5.5-6 percent’, Jacek Wisniewski said. Analysts do not expect any surprising changes in CPI. The MPC may be more cautious, however. ‘The MPC makes its decisions considering future inflationary risks. I can see them in high oil and energy prices. They may result in higher production costs. This year’s crops are another element. Food prices influence CPI index in 3 percent’, Richard Mbewe, WGI chief economist believed. ‘The scale of cuts may be limited by expected rise in remuneration and higher economic growth dynamics at the end of this year’, Jacek Wisniewski added.