Bloomberg News

Zloty Gains as Central Bank Doesn’t Commit to October Rate Cut

September 05, 2012

The zloty advanced for the first time in three days after Poland’s central bank didn’t signal it will cut interest rates next month.

The zloty gained 0.4 percent to 4.1796 per euro as of 5:39 p.m. in Warsaw, reversing an earlier drop to a six-week low. The yield on two-year notes rose 4 basis points to 4.07 percent, snapping five days of declines.

The central bank today kept borrowing costs unchanged for a fourth month at 4.75 percent, the highest level since 2009, even after the economy expanded at the weakest pace in almost three years. While Governor Marek Belka said in a subsequent news conference that policy makers were “open” to cutting rates, his comment wasn’t a “clear” announcement of a reduction in October, Wojciech Matysiak, an economist at Bank Pekao SA, wrote in an e-mailed comment.

“The market was a little surprised having priced in a small probability of a cut at this meeting,” Peter Attard Montalto, an economist at Nomura Holdings Inc. said in a comment. “There may well have been a greater amount of surprise for the market around the lack of pre-commitment” to a cut next month, he said.

Investors pared their expectation for a reduction in borrowing costs on Oct 3. One month forward-rate agreements are today trading 19 basis points below three-month Warsaw Interbank Offered Rate, compared with 20 basis points yesterday, according to data compiled by Bloomberg.

To contact the reporter on this story: Piotr Skolimowski in Warsaw at

To contact the editor responsible for this story: Gavin Serkin at

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