INTERVIEW Poland's Noga says CPI surprise doesn't change outlook on rates

WARSAW (Thomson Financial) - A surprise jump in inflation last month does not change the outlook for the Polish monetary policy council, which should raise borrowing costs in November and then either once or twice more in the first half of 2008, central banker Marian Noga said.

Noga, seen as a policy hawk who has supported the bank's 3 rises in interest rates so far this year, said the larger than expected jump in inflation to 2.3 pct last month supported the case for one more hike this year in November.

He said the bank's February inflation projection was likely to prove the key to the scale of further tightening next year.

'Today's data do not change my opinion on the need for monetary tightening,' he said. 'This year, one more rise in rates is needed, most likely in November.

'The scale of tightening next year will depend on the projection in February. If in the February projection the ECMOD model shows that inflation is dangerously close to 3.5 pct we will need another two rate hikes after this year's move. If not, once more next year may be enough.'

Noga also said inflation this year would likely exceed the bank's 2.5 pct target.

'There is no doubt that inflation this year will exceed 2.5 pct,' he said.

Source: Patrick Graham , forbes.com