(Adds analyst quotes, MPC's Noga, statement, detail)
By Karolina Slowikowska
WARSAW, Nov 26 (Reuters) - Poland's central bank cut
interest rates
The key interest rate will now stand at 5.75 percent. Markets had priced in some chance of a surprise cut even though all but two analysts in a Reuters poll predicted the bank would hold fire, probably until the new year.
The cut, the first since February 2006, marks the start of a new monetary policy cycle in Poland, the European Union's largest ex-communist economy, after a period of tightening that began in April 2007 due to a booming economy and high inflation.
In a statement, the central bank's Monetary Policy Council (MPC) said consumer price inflation could fall below its 2.5 percent target in the medium term as growth slows.
"The (Monetary Policy) Council evaluates that the probability of inflation in the medium term being below the central bank's target is higher than the probability of inflation being above target and decided to cut interest rates," it said.
"The decreasing pace of economic growth and, linked to this, lower demand for labour as well as a worsening financial situation in companies will weaken wage pressures and therefore inflationary pressures," it said.
Markets were little moved by the data, with dealers saying many investors had already got ahead of the curve.
"The council clearly softened its tone. It seems that there will not be another cut in December but a cut in January is possible," said Grzegorz Ogonek, economist at ING in Warsaw.
There is a tradition in Poland that the MCP does not change interest rates in December.
As inflation is easing -- in October it was 4.2 percent year-on-year, down from September's 4.5 percent -- and growth wanes on the back of the global financial crisis, the central bank is seen easing its monetary policy further ahead.
"We believe that the council will cut rates by 100 basis points next year. The statement does not, however, give certainty cuts will be happening now every month," Ogonek added.
REGIONAL SLOWDOWN
MPC member Marian Noga, seen as a hawk, said interest rates could be cut by a total of 50 basis points in the first quarter of 2009. He did not rule out a cut next month but said January was more likely.
The Polish move follows on the heels of a 50 basis point cut in Hungarian rates earlier this week. Hungary had raised rates by a hefty 300 basis points only last month to stave off a financial crisis that forced it to seek an emergency IMF loan.
The Czech Republic has also started easing monetary policy and Slovakia, which held fire on Tuesday ahead of its euro zone entry in January, should also cut further if the European Central Bank delivers an expected 50 bps cut next week.
Poland's fundamentals remain relatively robust but the government has acknowledged it will be affected by the rapidly deteriorating global outlook and has said it will shortly revise downwards its 4.8 percent growth estimate for 2009.
The Organisation for Economic Coooperation and Development (OECD) said on Tuesday it expected Polish growth of 3 percent in 2009, down from an expected 5.5 percent this year.
Ratings agency Moody's said Poland's economy could grow by 2.3 percent next year, or even less, which would be the slowest pace since 2002. Last year, Poland grew by 6.7 percent. (With additional reporting by Kuba Jaworowski and Pawel Sobczak; writing by Karolina Slowikowska and Gareth Jones; editing by Stephen Nisbet)