Bloomberg News

Polish Bonds Rally as Inflation Rate Drops More Than Estimated

February 15, 2013

Polish bonds rallied the most in three weeks and the zloty weakened after a report showed inflation slowed more than anticipated in January, increasing the chances of further interest-rate cuts.

Yields on government 10-year notes fell from the highest level in more than two months after the statistics office said consumer prices grew 1.7 percent, the slowest pace since August 2007, as energy costs fell and the economic slowdown deepened. Governor Marek Belka signaled this month that the central bank was close to ending monetary easing after four quarter-point reductions since November.

The inflation data “increases chances of an interest-rate cut at the meeting in March,” Ernest Pytlarczyk, chief economist at BRE Bank SA in Warsaw, said in an e-mailed comment today. “There is no doubt that the monetary easing we’ve seen so far is still insufficient to stimulate the economy.”

The yield on notes maturing in October 2023 fell five basis points to 4.3 percent at 3:07 p.m. in Warsaw. The zloty lost 0.2 percent to 4.1850 per euro, giving a drop in the week of 0.8 percent, the second-steepest decline among more than 20 emerging-market currencies tracked by Bloomberg.

The inflation rate was lower than the 2 percent median estimate of 30 economists in a Bloomberg survey.

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

To contact the editor responsible for this story: Wojciech Moskwa at

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