(Writes through with news conference, statement)
By Karolina Slowikowska and Pawel Florkiewicz
WARSAW, Oct 29 (Reuters) - Poland's central bank signalled an end to its monetary tightening campaign on Wednesday after it left interest rates unchanged and said economic growth could slow sharply to 2.8 percent in 2009.
The government targets gross domestic product growth of 4.8 percent next year but economists have forecast 3.9 percent as global financial crisis buffets emerging markets and recession looms in western Europe, Poland's main export destination.
"The budget sees growth (in 2009) at 4.8 percent, the same as in the June (inflation) projection. We see it differently - at 2.8 percent," Marian Noga, widely seen as a hawk on the bank's Monetary Policy Council (MPC), told a news conference.
For comparison, growth in Poland, the European Union's largest ex-communist economy, was 6.7 percent in 2007 and the government expects it to expand by 5.5 percent this year.
In a statement explaining the MPC decision to leave its key rate at 6.0 percent, the bank said it had changed its rate bias from restrictive to neutral.
Despite the expected sharp fall in growth, part of the bank's latest inflation projection published on Wednesday showed prices are expected to continue rising at a rate of above 3.0 percent at least until the end of next year.
Inflation in Poland stood at 4.5 percent year-on-year in September, below the August level of 4.8 percent.
RATES ON HOLD
Given such inflation concerns, most analysts had been expecting a rate hike this month, until the recent turmoil and a slew of bearish data showed the economy was finally slowing.
All analysts polled by Reuters on Oct. 21 predicted the MPC would hold fire on rates this month. But they said they did not expect the bank to rush to cut rates in present conditions.
"In the next few months I would expect the MPC to refrain from any decisions to change interest rates because the council will want to wait for the global markets situation to stabilise," said Grzegorz Maliszewski, chief economist at Millennium Bank in Warsaw.
The zloty lost as much as 17 percent against the euro in October as investors fled emerging markets, but as sentiment on global stock markets has improved in the last two days the zloty has strongly rebounded along with its regional peers.
The MPC must also weigh the government's decision to press for euro adoption in 2012, a move that will require Poland to meet tough inflation criteria. Several MPC members have said this will necessitate a more restrictive monetary policy.
"The government's declarations about euro adoption signal that interest rates should stay unchanged," said Marcin Mroz, chief economist at Fortis Bank in Warsaw.
The central bank's statement reiterated that Poland should join the euro zone as soon as possible after the politicians have reached agreement on the needed changes to the country's constitution.
The eurosceptic main opposition party Law and Justice (PiS) is opposed to early euro adoption but has said it would back a referendum on the issue. (Writing by Gareth Jones; editing by Andy Bruce)