The zloty strengthened against the euro as Prime Minister Donald Tusk sought a parliamentary vote of confidence after his government was rattled by a scandal.
The threat of deflation is forcing Polish central bank Governor Marek Belka to put interest-rate cuts back on the agenda.
Poland’s central bank signaled the possibility of an interest-rate cut this year, with Governor Marek Belka saying the inflation rate may fall below zero in “the summer months.”
Poland’s economy grew at a quicker pace in the first three months than an initial estimate, fueled by growing net exports and recovering consumption.
Poland’s borrowing costs will probably fall in today’s two-year bond auction as demand remains “high” for the sale of the least amount of the debt since May, according to PKO Bank Polski SA and Bank Millennium SA.
Polish companies have cut their expectations for second-quarter growth amid the escalating crisis in neighboring Ukraine, a central bank survey showed.
The zloty weakened after a report that Zyta Gilowska, a Polish central banker who backed monetary tightening at least twice in 2012, was in hospital.
Economic growth in Poland, the only European Union member to escape a recession last year, slowed in the first three months of the year, held back by a harsh winter and lagging fixed investment.
"The tape scandal is fading away."
- Grzegorz Maliszewski on Jun 26, 2014