The Polish zloty sank today, reaching a multi-year low against the Great Britain pound. Some market analysts attributed the plunge to the general weakness of currencies of emerging markets due to the strength of the US dollar. But very dovish comments made by the chief of the nation’s central Bank were also likely a major contributing factor to the zloty’s weakness.

Adam Glapinski, Governor at the National Bank of Poland, stated today that there is no chance of an interest Rate hike during the current term of the Monetary Policy Council, which ends in 2022:

The chance of a rate hike during the current term is still zero… this is still very low inflation.

Furthermore, he signaled that a rate cut is possible in case the impact of the COVID–19 pandemic on the nation’s economy worsens:

If the pandemic shock intensifies… we will return to the scenario of cutting rates.

The Governor also said that a strong currency will be detrimental to the economy and the central bank is ready to intervene in the currency market to weaken the zloty.

The NBP left its interest rates unchanged during the meeting on Wednesday this week. It upgraded its economic forecasts, predicting that GDP growth will be in the range of 2.6%–5.3% in 2021 (compared with 0.8%–4.5% in the November 2020 projection), 4.0%–6.9% in 2022 (compared with 3.8%–7.8%), and 4.0%–6.8% in 2023. As for the outlook for annual inflation, it also got an upgrade, to 2.7%–3.6% in 2021 (from 1.8%–3.2% in the November 2020 projection), 2.0%–3.6% in 2022 (from 1.6%–3.6%), and 2.2%–4.2% in 2023.

USD/PLN rallied from 3.8089 to 3.8483 as of 18:32 GMT today. EUR/PLN gained from 4.5580 to 4.5841, reaching the high of 4.5974 intraday. GBP/PLN rose from 5.2871 to 5.3208.

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Post tags: EUR/PLN, GBP/PLN, Interest Rates, National Bank of Poland, Poland, USD/PLN, Zloty

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