Poland's central bank cuts key rate to 4.50%

The Polish central bank cut its key interest rate by a quarter-point to 4.50 percent on Wednesday, amid economic slowdown and falling inflation.

The decision at the bank's monthly policy meeting was in line with analysts' forecasts and followed a downward revision of Poland's 2013 economic growth outlook from 2.9 percent to 2.2 percent.

Last month, the bank had wrongfooted analysts by not cutting the rate, shortly after Poland's centrist government announced that the economy was set to lose pace next year more rapidly than previously expected.

In addition, annual inflation has been falling gradually over recent months, from 4.3 percent in June to 4.0 percent in July and 3.8 percent in both August and September.

Commenting on Wednesday's decision, London-based analysts Capital Economics said it "suggests that policymakers are finally starting to acknowledge that the big threat to the economy comes from weakening growth, not high inflation".

They said total cuts of at least three-quarters of a point were likely over the coming months.

The bank had raised the rate by 25 basis points in May in a drive to dampen inflation, its first increase since June 2011.

It had raised the rate in January, April, May 2011 on the same grounds.

Poland has been the only member of the 27-nation European Union to remain in growth since the global economic crisis struck in 2008.

Domestic demand in the nation of 38 million -- the largest of the ex-communist countries that joined the EU in 2004 -- helped stave off some of the impact of the woes of Poland's European trade partners.

Growth rose to 3.8 percent in 2010 and 4.3 percent in 2011, but is expected to dip to 2.5 percent this year.

The European Commission's outlook for Poland, released Wednesday, is gloomier than the government's, with Brussels forecasting 2.4 percent growth this year and 1.8 percent in 2013.

Inflation is likely to be 3.8 percent across 2012, and fall to 2.6 percent next year, it said.

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