Zloty Advances, Bonds Yields Rise After 4Q GDP Data

The zloty hit a six-week high and yields on two-year government bonds jumped after fourth-quarter economic growth rose more than expected, curbing the need for further interest rate cuts.

The Polish currency strengthened 0.2 percent to 4.1432 per euro at 10:47 a.m. in Warsaw, paring declines from before the publication of the data. Yields on Poland’s two-year bonds rose seven basis points, or 0.07 percentage point, to 3.54 percent, the highest since Nov. 27.

The European Union’s largest eastern economy slowed for the fourth straight quarter to an annual pace of 1.1 percent, beating a median estimate of 0.9 percent in Bloomberg’s survey of 32 economists, the Warsaw-based Central Statistics Office said today. The data comes after the central bank cut interest rates four times in as many months and policy makers said in February they would reconsider their easing approach.

“The figures released today could be good enough to warrant a well-flagged pause in rate cuts,” economists at ING Bank Slaski SA (ING), led by Mateusz Szczurek, wrote in a note. The data is “zloty positive” and “negative” for shorter-term bonds, the analysts wrote.

Earlier today, Poland’s purchasing managers’ index, a gauge of manufacturing, rose to 48.9 points in February from 48.6 points a month earlier, below a median estimate of 49 points in Bloomberg’s survey of 19 economists.

Japan Credit Rating Agency Ltd. raised Poland’s foreign currency credit rating to A from A- today and its local currency grade to A+ from A, citing “continued improvement in the fiscal deficit” and “stable economic prospects.”

To contact the reporter on this story: Maciej Onoszko in Warsaw at monoszko@bloomberg.net

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net

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