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Polish Yields Drop to 8-Week Low as Gilowska Quits: Warsaw Mover

October 07, 2013

Polish bond yields declined to an eight-week low on expectations Zyta Gilowska’s successor on the central bank’s rate-setting panel will be more reluctant to tighten monetary policy in 2014.

The yields on Poland’s two-year government bonds dropped four basis points to 3.02 percent at 11:31 a.m. in Warsaw, the lowest since Aug. 13. The zloty weakened 0.1 percent to 4.2047 against the euro, depreciating for a second day.

President Bronislaw Komorowski accepted Gilowska’s resignation from the 10-person Monetary Policy Council on Oct. 4 and has three months to select her replacement, according to Polish law. The policy panel has kept its benchmark rate at record-low 2.5 percent at its last two meetings after cuts by a total of 225 basis points since November. Gilowska voted for one of eight rate cuts since November, the central bank’s website shows. She has missed at least five meetings since July 2012, including some because of health issues, according to voting records and comments from Governor Marek Belka.

“Gilowska was one of the most hawkish members of the MPC, so this change may potentially mean a tilt of balance of powers in the council toward more dovish monetary policy,” Bank Zachodni WBK SA economists, led by Maciej Reluga, wrote in a note today. “Theoretically, this can imply that rates may remain at the current all-time low level a bit longer.”

While policy makers repeated after a meeting last week that interest rates would be unchanged this year, central bank Governor Marek Belka said in an interview on Sept. 27 that his views were close to those central bankers who see stable borrowing costs through at least the first half of 2014.

A gradual economic recovery can restart the debate on interest rate cuts, fellow MPC member Elzbieta Chojna-Duch said in an interview for TVN CNBC today.

Former central bank Governor Hanna Gronkiewicz-Waltz, who’s facing a recall referendum as Warsaw mayor on Oct. 13, may be considered to fill the seat vacated by Gilowska, newspaper Rzeczpospolita reported today citing a Warsaw official of ruling Civic Platform whom it didn’t name.

To contact the reporter on this story: Maciej Onoszko in Warsaw at

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

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