Polish Yields Fall 3rd Day as Price Growth Slows; Zloty Weakens

Polish bond yields fell for a third day as growth in producer prices slowed, giving the central bank leeway to cut interest rates.

Five-year zloty note yields slid two basis points, or 0.02 percentage point, to 4.48 percent by 5:04 p.m. in Warsaw, the lowest since Aug. 8. The zloty weakened less than 0.1 percent to 4.0704 against the euro, depreciating for a second day.

Polish producer prices increased at an annual pace of 3.7 percent in July, compared with 4.4 percent a month earlier, the statistics office said today. Job growth at companies with more than nine workers slowed to zero, a 27-month low, and wages grew less than expected, according to Aug. 17 reports from the statistical office.

“Recent macroeconomic data were supportive for the dovish wing of Polish Monetary Policy Council,” Janusz Dancewicz, the chief economist at DZ Bank Polska SA, wrote in a weekly report to clients today.

Three-month forward-rate agreements are trading 29 basis points below Warsaw Interbank Offered Rate, signaling investors’ expectation the central bank will cut the main rate by the end of this year, data compiled by Bloomberg show.

To contact the reporter on this story: Piotr Skolimowski in Warsaw at pskolimowski@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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