Zloty Weakens as Polish Central Bankers Discuss Rate Cut Needs

The zloty weakened and two-year bond yields fell to a record low as Jan Winiecki became the fourth Polish central banker this week to signal a cut in interest rates on mounting evidence of an economic slowdown.

The zloty depreciated 0.2 percent to 4.1020 per euro as of 5:15 p.m. in Warsaw, the fifth-steepest loss among more than 20 emerging-market currencies tracked by Bloomberg. Yields on two- year government notes fell to a record 3.91 percent, data compiled by Bloomberg show.

There is a greater chance of Polish interest rate cut in November as the 10-member panel receives inflation and economic growth projection, Winiecki was quoted as saying by Dziennik Gazeta Prawna today.

“The comments from the Monetary Policy Council confirm that rate cuts are coming,” Cezary Chrapek, a fixed-income and currency market analyst at Citigroup Inc.’s unit in Poland, wrote in an e-mailed note.

Poland’s industrial output shrank the most in more than three years in September while corporate job growth stagnated, adding to signs of economic slowdown and piling pressure on policy makers to cut rates. A “more decisive” rate cut is needed next month, Elzbieta Chojna-Duch, a member of the Monetary Policy Council, told reporters in Warsaw yesterday.

A rate reduction in November may start a “short cycle,” PAP newswire cited policy maker Anna Zielinska-Glebocka as saying yesterday. Speaking separately in an Oct. 18 interview with PAP, her fellow rate setter Adam Glapinski said he “won’t rule out” voting in favor of easing at the Nov. 6-7 meeting.

Zielinska-Glebocka, Glapinski and Winiecki were among six of the eight council members present at the meeting in September to vote against trimming rates, records released by the central bank showed yesterday. Chojna-Duch sought cuts of 50 and 25 basis points in Poland’s reference rate, now at 4.75 percent.

The central bank, the only one in the European Union to raise borrowing costs this year, has kept its main rate at the highest since 2009 even as policy makers around the world ease conditions to avert a global slump.

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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