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UPDATE 1-Polish cbanker: no chance for cuts now, CPI too high

Published 06/02/2009, 02:30 AM
Updated 06/02/2009, 02:40 AM
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WARSAW, June 2 (Reuters) - There is no chance for interest rate cuts now because inflation remains too high, a member of the central bank's Monetary Policy Council, Marian Noga, was quoted as saying on Tuesday.

The comments published in daily Puls Biznesu mark a shift in Noga's stance after he had been saying in recent weeks that the central bank was still in an easing bias and could reduce borrowing costs this month.

"I now see no possibility of any move on interest rates. For rates to be cut, inflation would need to fall faster than the finance ministry's 3.8 percent forecast for May (from 4.0 percent in April)," Noga said.

The central bank's 10-member policy council cut the main rate by a total 225 basis points to an all-time low of 3.75 percent since November to help the sharply slowing economy. Inflation has held, however, well above the bank's 2.5 percent target, largely fuelled by the weak zloty and rising housing costs.

The finance ministry expects annual inflation to ease to 3.8 percent in May from 4.0 percent in April.

Because of the high inflation, the central bank paused its monetary easing cycle in April and May and some central bankers have already signalled the pause may be longer.

One policymaker, Dariusz Filar, even suggested recently that the monetary easing cycle was already nearing its end. [ID:L1342661] (Writing by Karolina Slowikowska; Editing by Tomasz Janowski)

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