Prices in Poland are not increasing as quickly as previously thought, reinforcing an already strong debate over potential interest rate cuts in December. Meanwhile, in the eurozone, it is once again becoming clear that a single interest rate for all member economies does not work equally well for everyone. Investors are catching their breath after a series of declines.
A Sudden Drop in Inflation
Analysts expected inflation in Poland to fall in November—but they anticipated a decline to around 2.6%. Instead, the preliminary reading came in at 2.4%. This represents a 0.4 percentage point improvement compared with October. Although these are only flash estimates, even if the final figures are slightly weaker, it will still be good news.
What does this mean for currency markets? Since expectations of a December interest rate cut were already circulating, advocates of this scenario have now received strong support. Inflation is almost at the center of the National Bank of Poland’s target range. If rate cuts materialize, the złoty can be expected to weaken against major currencies, especially the euro. However, the move is unlikely to be dramatic, as investors have already begun pricing it in.
Inflation Across Europe
Today’s data did not come only from Poland. Earlier, preliminary readings were released for France and Spain. French consumer prices rose 0.9% year-on-year, while Spain recorded 3%. France beat expectations by 0.1 percentage point, whereas Spain came in worse than forecast.
These results highlight challenges facing the eurozone. France would likely prefer lower interest rates to help revive its stagnant economy—or, as some critics suggest, soften its decline. Spain, on the other hand, appears to have inflation under control, but fears of a renewed wave of price increases linger. The European Central Bank, however, has limited flexibility and will likely have to wait out the situation. This explains the muted reaction of the euro.
Markets Breathe a Sigh of Relief
Recent days have brought a rebound in stock markets and alternative assets. Renewed expectations of interest rate cuts in the United States have encouraged capital to flow out of bonds and deposits into riskier investments. U.S. stock markets had a particularly strong week, with major indices rising roughly 1% per day. Gold has once again surpassed the $4,200 mark and now sits less than 5% below its all-time high. Even cryptocurrencies have recovered, though investor optimism there is noticeably more cautious. Nevertheless, bitcoin has climbed back above $90,000, calming the market to some extent.
Source: https://managerplus.pl/rynki-odzywaja-po-spadkach-zloto-gieldy-i-bitcoin-odbijaja
