Central bank cuts interest rates

Poland central bank's Monetary Policy Council has cut interest rates by 25 basis points on Wednesday to 5.75 percent, a move that challenged analysts' expectations that rate cuts would begin in the first quarter of 2009.

The cut is in line with what other central banks are doing, which are taking into consideration worsening growth prospects. Poland's inflation in October stood at 4.2 percent y/y, meanwhile its GDP for 2009 is expected to drop to 4.8 percent.

"The council decided to act because of the rapidly worsening growth forecasts in the world and in Poland, which also impacts the inflation outlook. Recent comments by the MPC suggested that quite a number of them were considering the necessity of rate cuts, the only question being 'when'," Piotr Bielski, economist at Bank Zachodni WBK told Reuters.

Meanwhile, analysts expect MPC further cut rates, but rather than a one-time cut, they expect a series of 25 basis point cuts from month to month for the next while.

Source: TVN CNBC, Reuters