Polish Central Bank to Cut Rates to Record Today, Survey Shows

By Dorota Bartyzel

June 24 (Bloomberg) -- Poland’s central bank will probably cut its key interest rate for a sixth time in eight months as it seeks to keep the economy from stagnating.

The rate-setting Monetary Policy Council will cut the benchmark seven-day reference rate to a record-low 3.5 percent, according to all 22 economists surveyed by Bloomberg. The decision will be announced about noon, followed by a press conference at 4 p.m. in Warsaw.

The bank has already trimmed the key rate by a combined 2.25 percentage points to 3.75 percent since November to help the largest economy of the European Union’s eastern members avoid recession. The government lowered its economic growth forecast for this year to 0.2 percent, while the International Monetary Funds said the Polish economy may contract 0.5 percent.

“We expect the path of further disinflation and deteriorating dynamics of GDP will induce the council to reduce the reference rate in June by 25 basis points,” said Monika Kurtek, an economist at Bank BPH.

The new inflation and GDP projection, already known to the rate setters, will be published on June 25.

Average corporate wages rose 3.8 percent in May, the slowest pace in 2 1/2 years, while employment fell 1.7 percent, its fourth monthly decline, suggesting a deterioration in consumption. Lower demand trimmed inflation, which in May dropped from a six-month high to 3.6 percent.

“The May inflation data confirmed a declining trend in inflation that will continue in the summer months, giving policy makers more room to loosen monetary conditions,” said Marcin Mrowiec, an economist at Bank Pekao SA in Warsaw.

To contact the reporter on this story: Dorota Bartyzel in Warsaw at dbartyzel@bloomberg.net.