Speculations about 50 bps rate cut in October hurts zloty
Hungarian inflation in August in line with expectations
The Polish zloty lagged behind its peers yesterday as it was under modest pressure in early trading after signs that the central bank may even consider cutting interest rates by 50 basis points in October. We however believe there will be not enough votes for more aggressive easing and still expect 25 bps rate cuts in both October and November. News that Russia might have cut natural gas exports to Poland in order to prevent its re-export to Ukraine had no strong impact on regional markets either and the regional currencies thus strengthened against the euro yesterday. The situation in government bond markets calmed down yesterday as well vis-à-vis the day before. Hungarian government bonds were an exception and 10-year yield went up by 11 bps yesterday.
Read the full report: FX Daily