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Polish Five-Year Zloty Bond Yields Decline as Rate Cut Bets Grow

Polish five-year bond yields declined as some of the central bank’s policy makers signaled they may cut interest rates next month.

The yield on notes maturing in April 2017 fell one basis point to 4.18 percent as of 4:15 p.m. in Warsaw, near a record low of 4.166 percent reached last week. The zloty gained 0.2 percent to 4.0718 per euro.

Adam Glapinski, who backed a rate increase in May, said today in an interview with PAP newswire that he isn’t “absolutely against” cutting borrowing costs in November if the bank’s projections show a “serious” economic slowdown next year and no threat to its inflation target. Fellow rate-setter Elzbieta Chojna-Duch told TVN CNBC television the central bank should consider a series of rate cuts after a “radical reduction” to kick-off the easing.

“Markets will continue to support lower rates in the front-end, given the broad evidence of slowdown in the Polish economy,” Luis Costa, senior emerging-market strategist at Citigroup Inc. in London, wrote in an e-mailed note today. “We believe the inflation report out at the beginning of November will enable a more dovish stance” by central bankers.

Investors in interest-rate derivatives increased their bets for a cut next month after policy makers unexpectedly kept borrowing costs unchanged last week. One-month forward rate agreements fell to 8 basis points below Warsaw Interbank Offered Rate today from less than one basis point on Oct. 5, according to data compiled by Bloomberg.

To contact the reporter on this story: Piotr Skolimowski in Warsaw at

To contact the editor responsible for this story: Gavin Serkin at

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