Information on the meeting of the Monetary Policy Council on July 18-19, 2002
The Monetary Policy Council held its meeting on July 18-19, 2002. The Council was submitted the materials prepared by the Management Board and departments of the NBP as well as information and analytical materials prepared by the Ministry of Finance, banks and research institutes. The Council discussed the external conditions of the Polish economy, the situation in the real sector of the economy and tendencies in the area of wages and social benefits, in public finance sector, money supply, lending and interest rates and the formation of prices and inflation expectations and the inflation outlook.
Decision of the Monetary Policy Council
The latest economic data enhance a little the signals of the economic boom:
- Industrial production grew by 2.2%,
- Higher than expected were budget revenues coming from indirect taxes and CIT,
- The drop of employment in the enterprise sector has been halted,
- Higher than a year before were the revenues from export.
The importance of factors indicating the need to be prudent in monetary policy has not been decreased. The most important among them are the following:
- An outlook of a high public finance sector deficit in conditions of the planned economic growth in 2003 constitutes a basic limitation of the playing field for monetary policy; an additional risk factor for the public finance stability are the forecasted write-offs of tax arrears, guarantees and tax allowances;
- A further drop of the annualized deposit dynamics and the saving tendency of households in conditions of the increased individual consumption;
- The maintaining of a high dynamics of cash in circulation;
- A considerable depreciation of the exchange rate of the zloty, especially against the euro, within the recent weeks increases the uncertainty about the exchange rate of the zloty in future;
- Full results of interest rate cuts by 10.5 percentage points in total made since February 2001 have not been revealed yet.
Considering these arguments, the Monetary Policy Council decided not to change the interest rates of the NBP and maintain its neutral position in monetary policy.
The next meeting of the Monetary Policy Council will be held on August 27-28, 2002.