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Deflation Curve Shows Polish Price Risk as ECB Boosts QE

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Polish bonds are showing investors see little likelihood of rising consumer prices at home as concern builds the euro region is exporting deflationary pressures.

The yield premium of 10-year zloty bonds over two-year notes narrowed to the least in 16 months this week, with the spread over German bunds near a six-year low, amid record Polish deflation. The European Central Bank must drive inflation higher quickly, and will broaden its asset-purchase program if needed to achieve that, ECB President Mario Draghi said today.