* Polish MPC bucks regional trend by keeping rates on hold
* Companies say high borrowing costs prevent investment, growth
By Marcin Goettig
WARSAW, Oct 4 (Reuters) - With its growth sliding, employment flat, and inflation slowing, sometimes it seems that the only thing not on a downward path in former EU growth leader Poland is interest rates.
By holding the cost of borrowing stable on Wednesday, its Monetary Policy Council ignored tacit green lights on policy easing from the U.S. and euro zone central banks that other emerging European central banks were quick to heed.
Following an unexpected rate hike in May that many economists now say was probably a mistake, it has also irked firms and consumers eager for any ray of hope among the clouds gathering over the European Union's largest eastern economy.
And even though economists now say rate setters are almost certain to begin an easing cycle next month that will eventually lop Poland's 4.75 percent main rate down to 4 percent, it will come too late for those feeling the pain today.
"I'm disappointed with today's decision," said Piotr Bielinski, chief executive at Action, an IT distributor with 644 employees and 2011 revenues of 2.7 billion zlotys.
"We are holding costs under control, but if financing costs go up, then we postpone planned investments. With no investments there are no new jobs, and without jobs people stop buying."
While many EU states have already plunged into double-dip recessions, Poland was the bloc's only member to avoid contracting since the 2008-2009 economic crisis.
A 94 billion zloty ($30 billion) euro infrastructure-building spree ahead of its hosting of the Euro 2012 soccer tournament helped. But with those roads and stadiums finished, a string of builders have now filed for bankruptcy and the country's 38 million consumers are on the defensive.
In a July survey, nearly 70 percent of Poles said the economy was "heading in the wrong direction". It has only worsened since then. Manufacturing PMI data hit a three-year low in September. Retail sales growth has slowed to near zero on a monthly basis and new loans have ground to a halt.
Growth is expected to slow to above 2 percent next year - an enviable expansion for EU states mired in recession but a cold shower for a country that has enjoyed uninterrupted expansion for the last two decades. And Some economists say Poland could even contract on a quarter-on-quarter basis near the year end.
The decision may reflect the independent mindset of bank Governor Marek Belka, a former prime minister and finance minister who helped put in place strict spending rules that have underpinned public finances since the 1990s.
The bank may also be seeking to underline that it does not see a slowdown in growth - the economy is still far from recession - as especially dramatic.
It also reflects the ultra-cautious approach of the bank, which has kept inflation below 5 percent since 2000, in contrast to peers like Hungary or Turkey.
"Belka is moderate and he's pragmatic. He's not only focused on the inflation target," said Piotr Bujak, chief economist for Nordea in Warsaw.
"I believe he would ease monetary policy if it were up to him. But he has found himself at an institution that has been historically conservative and restrictive in monetary policy - more so than other central banks in the region or even the world."
WAITING FOR DATA
When Prime Minister Donald Tusk signalled his government was ready to help the economy by abandoning a plan to bring the budget deficit below the EU's 3 percent prescribed ceiling this year, economists thought the monetary council would follow suit.
That view gained momentum after the U.S. Federal Reserve and European Central Bank introduced moves that, respectively, would hand cash to yield-hungry investors and ease fears of an imminent euro zone blowup.
Economists thought those factors would support emerging European currencies and bonds and thus ease fears among policymakers that quick rate cuts could undermine currencies and bond markets vulnerable to knee-jerk selloffs.
They were half right. Hungary's central bank cut its rate last week to 6.5 percent - its second in two months - when board members sympathetic to Prime Minister Viktor Orban's pro-growth policies outvoted Governor Andras Simor and his two deputies.
Although the Hungarian vote overruled repeated warnings from Simor that it could drive consumer prices higher and destabilise the forint, the currency has held broadly steady, confounding fears that investors would bolt. It also pleased businesses.
"We welcome and support the rate cuts, it's good for the economy," said Laszlo Parragh, president of the Hungarian Chamber of Commerce and Industry. "Obviously not as soon as tomorrow, but it can have an impact in the longer term."
Facing a probable fourth quarter of recession, the Czech central bank also cut its main rate to a record low 0.25 percent and said it could intervene against the crown currency.
And a Reuters poll showed on Wednesday that central Europe's currencies were expected to firm 1 to 2 percent in the coming year, benefiting from increased risk appetite.
But Belka said Poland's MPC still wanted to see more data on the pace of the slowdown and an inflation report due next month.
August inflation stayed above the bank's target at 3.8 percent, but it fell a third of a percentage point from July, and economists said it was a matter of when, not if, the MPC would ease.
"Why didn't they cut... What more evidence do they need?" said Neil Shearing, an economist from London-based Capital Economics.
"It's clear that there's still a majority on the MPC that are concerned about the persistently high nature of inflation... But it's only going to be a matter of time before they see the evidence they need to see."
(Additional reporting by Grzegorz Szymanowski and Karolina Slowikowska in Warsaw and Krisztina Than in Budapest; Writing by Michael Winfrey; Editing by Hugh Lawson)
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Keywords: POLAND RATES/DISAPPOINTMENT