Polish Zloty Rises Following NBP Decision

The Polish zloty rose today even as the nation’s central bank left interest rates unchanged. Some analysts say that policy makers are reluctant to tighten monetary policy because they are afraid that geopolitical risks could derail Poland’s economic recovery. Still, the central bank’s outlook is relatively optimistic.
The National Bank of Poland left its main interest rate at 2.5 percent, keeping other rates unchanged too. The bank had fairly positive view on the Polish economy:

Data on domestic economic activity confirm a continuation of the gradual recovery in Poland.

The NBP concluded:

In the opinion of the Council, gradual economic recovery is likely to continue in the coming quarters, however, inflationary pressures will remain subdued. Therefore, the Council decided to keep NBP interest rates unchanged.

As for the future policy, the central bank commented:

The Council maintains its assessment that NBP interest rates should be kept unchanged for a longer period of time, i.e. at least until the end of the third quarter of 2014.

Economists are arguing that the current political crisis in the neighboring Ukraine should not affect Poland directly as the two countries are not trading between themselves very much. Yet the geopolitical risks may discourage investors to bring capital to riskier economies, especially to those of Eastern Europe.
USD/PLN fell from 3.0137 to 3.0081 and EUR/PLN declined from 4.1971 to 4.1876 as of 17:19 GMT today.

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