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

Jan. 2 (Bloomberg) -- 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.

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. 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

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