The zloty strengthened the most in seven weeks after a report showed Poland’s economy grew at the fastest pace in two years last quarter.
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 central bank Governor Marek Belka is keeping mum about the future path of interest rates, seeking to prevent traders from prematurely betting on higher borrowing costs and squeezing the nascent economic recovery.
The zloty slid for a second day while yields on Poland’s five-year notes dropped to a record on speculation the central bank will signal tomorrow it plans to cut interest rates.
"These data, coupled with potentially stronger growth in industrial production, may cool rate-cut expectations, but this will probably be temporary."
- Rafal Benecki on Jul 15, 2014