The monetary policy council (MPC) cut its key intervention rate by 50 bps to 8.00% today, in line with our expectations. The council cut the marginal lombard and discount rates by 100bps. The higher scale of reduction can be explained by an effort to narrow the spread between the central bank rates. Traditionally, the MPC maintained neutral bias for its future policy moves.
Despite that the bias remains at „neutral,” the RPP apparently put up with the fact hat the waning growth in the EU would have a strong impact on Polish export. Therefore the statement from the meeting, to be released later today, should be rather dovish. Recently, the vice governor Bratkowski estimated the GDP growth for this year at mere 0.7% y/y. It indicates that the central bank is not afraid of growing inflationary pressures in H2 2002 as well as in 2003. Therefore we maintain our prediction that the intervention rate will be cut in two more steps by 50 bps this year. In December 2002, it should therefore stand at 7.00%.
Konrad Soszynski, Kredyt Bank, S.A., Warsaw
Jakub Dvorak, Investment Research, CSOB