The Polish zloty held to a tight range between 3.81 and 3.82 EUR/PLN throughout the entire clam session on Monday. With politics somewhat in the shade following the Katowice disaster. The preliminary 2005 GDP figures came into focus right after the beginning of trade. Despite coming in slightly on the lower side of expectations the data were not much of a surprise, and as such had no relevant impact on the zloty. With the national mourning period to last till Wednesday the lingering political uncertainty will fall off the market’s agenda at least till the second half of the week. Hence MPC decision on rates and communiqué as well as the Fed meeting will probably receive more attention today. The market is clearly counting on a 25 bps reduction in the Polish official rate, and we believe that given the favorable inflation outlook such a move seems to be a foregone conclusion. Hence the decision itself should be neutral for the zloty.
(CSOB - Investment research)