Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Poland to Leave Rates Unchanged on Weak Zloty, Survey Shows

Poland’s central bank will probably leave borrowing costs unchanged at the highest level in almost three years to prevent a weaker zloty from boosting inflation that has exceeded the target of policy makers for a year.

The Narodowy Bank Polski will keep the benchmark seven-day interest rate at 4.5 percent, according to all 32 economists in a Bloomberg survey. The decision will be announced after 12 p.m. tomorrow in Warsaw following a two-day meeting.

The central bank halted monetary tightening in July, relying on one percentage point of rate increases in the first half to tame price growth. Policy makers may seek to keep the zloty from weakening as the neighboring euro area grapples with its sovereign-debt crisis, while the economy is showing signs of resilience, making it less urgent to lower borrowing costs.

“The concern over currency risk will keep them from reducing rates as it would boost the zloty’s volatility and” may lead to further “weakness, threatening inflation,” Monika Kurtek, chief economist at Bank Pocztowy SA in Warsaw, said in a telephone interview. “There is no pressure to help the economy as recent data showed it is doing fine.”

The zloty slumped to the lowest level in 27 months before the central bank intervened to strengthen the currency on Sept. 21 for the first time since the exchange rate was allowed to move freely in April 2000. It stepped into the market two more times in the three following weeks.

The Polish currency strengthened to 4.3583 against the euro as of 11:21 a.m. in Warsaw from 4.3746 at yesterday’s close. The yield on the two-year bond maturing in January 2014 fell to 4.569 percent from 4.575 percent yesterday.

Weighing Prospects

Central banks across the region have been weighing faltering growth prospects with weaker currencies. Hungary kept its benchmark interest rate steady for an eighth month on Sept. 20, while the Czech central bank followed suit two days later. Romanian policy makers unexpectedly cut their main interest rate to a record-low 6 percent from 6.25 percent on Nov. 2.

Poland’s gross domestic product grew about 4 percent in the third quarter from a year earlier as industrial output and retail sales rose more than expected in September, Kurtek said. Manufacturing unexpectedly grew in October, driven by domestic demand, suggesting the economy is weathering the effects of a slowdown in U.S. growth and the euro region’s debt crisis.

The central bank may also prefer to wait until Prime Minister Donald Tusk, whose Civic Platform party won a second four-year term last month, makes his 2012 budget plan public, Peter Attard Montalto, a London-based economist at Nomura Holdings Inc., wrote in an e-mail.

‘No Real Need’

“Local data show there is no real need for significant monetary stimulus and there is still too much uncertainty about the government’s reform and budgetary plans for next year and beyond for the” Monetary Policy Council “to be able to change its view on that front,” Montalto wrote.

The European Central Bank’s unexpected quarter-point cut in its main rate to 1.25 percent on Nov. 3 probably won’t prompt Polish policy makers to follow suit as a wider differential can help prop up the zloty, Montalto said.

While three-month forward rate agreements show no expectations for a rate change until February as they are trading 3 basis points below the three-month Warsaw interbank offered rate, or Wibor, six-month FRAs are 23 basis points below Wibor, indicating investors are betting on a rate cut before June.

“There’s no need to make changes in the next few months or even quarters,” policy maker Anna Zielinska-Glebocka said in an Oct. 19 interview. “If nothing extraordinary is happening in the economy, rates should be held steady for an extended period, which would be in keeping with our monetary policy guidelines.”

Zielinska-Glebocka’s comments followed similar statements from other rate setters. Zyta Gilowska said on Oct. 11 a rate cut would be “premature” as inflation remains fast and the zloty is set to weaken, while Andrzej Bratkowski said a week later rate increases are more likely than cuts as the economic slowdown will be only be “shallow and short.”

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.