MPC cuts interest by 0.25%, ‘lifting the domestic risk to the złoty’

Today's decision by the Monetary Policy Council (RPP) to cut interest rates by 25 basis points removes the domestic risk factor from the Polish currency, according to senior analyst Roman Ziruk of Ebury. Despite recent global market turbulence not favoring the złoty, the significance of a key domestic risk might be diminishing. The RPP's decision aligns with consensus expectations, and the exchange rate of the złoty may be more crucial for decision-makers than suggested by President Glapiński after the September decision.

This could increase the likelihood of gradual adjustments in monetary policy, the commentary on the RPP's decision notes. Market valuations prior to the decision indicated investors expected a more significant cut than the consensus, anticipating a move of approximately 50 basis points. Consequently, the złoty strengthened in the face of a smaller cut, briefly reaching below the 4.60 level against the euro (the lowest in a week) and later hovering around it.

Source: ISBnews