Polish Economy, Inflation Require Half-Point Rate Cut, BNP Says

Polish economic and inflation data would justify a half-point interest-rate reduction and the central bank’s decision next week will probably be “a close call,” said Michal Dybula, an economist at BNP Paribas SA. (BNP)

While a 50 basis-point rate cut was defeated six votes to four at November’s meeting, according to minutes published today, and was probably rejected by a slim margin again in December, a quarter-point reduction is more likely this month, Warsaw-based Dybula wrote.

Polish manufacturing contracted for a ninth month in December, according to a purchasing managers’ index published today by HSBC Holdings Plc. (HSBA) The inflation rate dropped to a two- year low in November amid the weakest consumer demand in almost 10 years.

The bank will cut its key rate by another 125 basis points through June, bringing it to 3 percent, BNP forecasts.

To contact the reporter on this story: Agnes Lovasz in London at alovasz@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.