INTERVIEW Poland's Noga softens line on rate hikes, says 50 bps may suffice

Poland's central bank may be able to end its tightening cycle with interest rates at 5.25 pct around March next year if inflation comes in just above its target in December, central bank policymaker Marian Noga said today.

Speaking after the finance ministry predicted inflation likely jumped to 2.0 pct in September, Noga told Thomson Financial News inflation was likely to be at least 2.6 pct in December.

'Inflation at the end of the year for sure will exceed the bank's (2.5 pct) inflation target and should be a minimum of 2.6 pct,' he said.

'We should see one more hike in interest rates this year. The scale of tightening next year will depend on inflationary processes in November and December.'

Poland's central bank has upped interest rates three times this year but members of its policy council have cooled expectations on the pace of further rises since headline inflation dipped more than expected in August.

Noga, who has supported all of the bank's rises in borrowing costs this year, said last month interest rates should rise to 5.5 pct next year.

The bank's main borrowing rate now stands at 4.75 pct.

'If it turns out that inflation is only just above the target, it may turn out that one more rate hike will be enough next year and we would end the tightening cycle in March.'

'If it is nearer 3 pct, we will probably need two more rises next year.'

Source: By Paweł Sobczak, forbes.com