Zloty Heading for Six-Week High on Speculation Rate Cuts Ending
The zloty is heading for a six-week high on speculation that Poland’s policy makers will end a series of interest rate cuts at tomorrow’s meeting.
The zloty strengthened 0.2 percent to 4.1352 per euro at 10:16 a.m. in Warsaw, on course for the highest close since Jan. 17. The yield on the government’s two-year bond fell two basis points, or 0.02 percentage point, to 3.54 percent.
Poland’s Monetary Policy Council (MPC) will probably deliver a quarter-point cut in interest rates to 3.5 percent tomorrow, according to 22 out of 38 economists surveyed by Bloomberg. The remaining 16 expect rates to stay unchanged after four quarter-point reductions in as many months.
“The council will cut rates by 25 basis points for the fifth month in a row and at the same time signal a switch to a neutral ’wait-and-see’ approach, which -- given the market’s more aggressive expectations regarding further cuts -- should strengthen the Polish currency,” Bank Millennium SA (MIL) economists, led by Grzegorz Maliszewski, wrote in a note.
The rate-setting council was unanimous in ordering a 25 basis point rate cut in January, press agency PAP said today, citing voting records published in the government’s Judicial and Economic Monitor. The vote was 9-0 with Zyta Gilowska absent, the record showed.
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