Polish bond yields declined and the zloty weakened for a fourth day after the inflation rate fell below the central bank’s target for the first time in more than two years, stoking speculation of more interest-rate cuts.
Polish industrial output plunged the most in almost four years, boosting expectations for an interest-rate cut next month to avert the first recession in two decades for the European Union’s largest eastern economy.
Poland’s slowing inflation raises the chances that the central bank will forgo a planned pause in monetary easing and reduce interest rates for a fourth month in February to boost economic growth, said policy makers in Warsaw.
Poland’s central bank kept its main interest rate at a record low for a 15th month as consumer-price growth remained at the lowest level in three years and policy makers await updated economic forecasts.
Poland’s central bank will cut borrowing costs for the first time since 2009 as the European Union’s biggest eastern economy slows amid the euro-area debt crisis, according to all 35 economists surveyed by Bloomberg.