UPDATE 1-Polish c.bank hawks say Feb rate cut may be needed

WARSAW, Feb 3 (Reuters) - Poland's central bank may cut interest rates again at the February meeting of its rate-setting panel, two hawkish policymakers said on Tuesday, in comments underlining the pace of the country's economic slowdown.

The bank's 10-strong Monetary Policy Council (MPC) has already cut its main rate by 175 basis points to 4.25 percent since November to buttress growth hit by the global crisis and now expected to fall to about 2 percent in 2009.
'We're still in an easing cycle... Every sharp decline in industrial output breaks the balance in the economy. We can't allow for that now,' policymaker Marian Noga told the Gazeta Prawna daily in an interview.

'I do not rule out that in February we might have another rate cut,' said Noga, who consistently backed rate hikes during the bank's previous monetary tightening cycle.

Halina Wasilewska-Trenkner, one of only two council members to oppose November's cut in interest rates, said the chances were equal of the bank cutting rates or making no move when it meets later in February.

She signalled the central bank's inflation projection, which policymakers traditionally obtain before the MPC's February meeting, would be key to the decision.

Noga also said it would be more appropriate now for the central bank to move in cuts of 25-50 basis points. Wasilewska-Trenkner did not elaborate on her preferred scale of easing.
In a further sign of the slowdown, the head of the state investment agency said foreign direct investments into the European Union's largest ex-communist member were likely to drop to 7-10 billion euros in 2009 from about 12 billion in 2008.

Labour Minister Jolanta Fedak said on Tuesday unemployment could jump to as much as 12 percent by the end of this year if economic growth continues to slow.

Poland's unemployment has recently started to rise after a prolonged downward trend, hitting 9.5 percent in December.

Source:By Adrian Krajewski, Kuba Jaworowski

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