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Poland to Consider Rate Cut Next Month, BNP’s Dybula Says

Poland’s central bank, the only one in the European Union to have raised borrowing costs this year, will consider lowering them next month as growth and inflation decelerate, said Michal Dybula, an economist at BNP Paribas SA.

While a motion to reduce rates filed at the next meeting of the Monetary Policy Council on Sept. 4-5 will probably fail, it may garner support from the majority of the 10 rate-setters in October, Dybula, a Warsaw-based economist for central and eastern Europe, said in an Aug. 17 e-mail. The bank will cut rates by 75 basis points to 4 percent by early 2013, he wrote.

Traders are betting the most in three years that Poland’s central bank will lower interest rates, according to forward-rate agreements. Inflation, which slowed more than expected in July, “disappointing” labor-market figures and “weakness” in industrial output will persuade Governor Marek Belka and his council members to reverse the May increase sooner rather than later, Dybula said.

“The majority of the council will probably think it too early to make a U-turn on policy,” he wrote. “However, the longer the MPC hesitates, the more policy action it will need to take later on.”

Forward-rate agreements used to bet on borrowing costs in three months fell to 33 basis points below the Warsaw interbank offered rate on Aug. 14, the biggest gap since 2009 and signaling at least a quarter-point cut by mid-November, according to data compiled by Bloomberg. The difference was 29 basis points as of 1:02 p.m. in Warsaw.

In July, Polish jobs growth at companies with more than nine workers slowed to zero, a 27-month low, and wages rose a less-than-forecast 2.4 percent from a year earlier, slowing from 4.3 percent in June. The inflation rate fell to 4 percent in July after reaching a four-month high of 4.3 percent in June.

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