Poland's Monetary Policy Council has cut interest rates by a larger-than-expected 75 basis points as it works to cushion the impact of the economic downturn. The key reference interest rate now stands at 4.25 per cent.

A cut of 50 basis points had been expected for January - the country's third rate cut in as many months - but a more aggressive position was taken as the national economy slows and inflation comes down. Economists and analysts in Warsaw predict further interest-rate cuts in the coming months.

Economic data out of Poland has been mixed; industrial output in December was 4.4 per cent down on the year before, thought retail sales figures for the same month were stronger than expected.

The European Bank for Reconstruction and Development puts Poland among the most robust economies in Central and Eastern Europe, forecasting a marked slowdown in growth for the country, but not collapse. The country is helped, the EBRD says, by the fact that its banks' foreign liabilities are "reasonably well contained".

The Monetary Policy Council began cutting interest rates with a reduction of 25 basis points in November, followed by a 75-point cut in December.

Robin Bowman