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Wednesday, March 19, 2008

Poland Industrial Output and Producer Prices February 2008

Poland's zloty rose against the euro again today following release of the industrial output data which seemed to suggest that economic growth quickened last month, giving the central bank more reason to raise interest rates. The zloty gained for a second day as producer prices jumped 3.2 percent, from 2.8 percent in January, and industrial output gained to an annual 14.9 percent, from 10.8 percent, the Warsaw- based Central Statistical Office said today. Month on month, output rose 1.6 percent, while the annual growth rate was the highest since January 2007.

Analysts now seem pretty convinced that Poland's central bank will raise its main rate a quarter-percentage point to 5.75 percent when it next meets on March 27. The central bank has raised its benchmark rate by 150 basis points since April to the current 5.5 percent rate. Poland's main interest rate is thus now 1.5 percentage points above the euro region's 4 percent benchmark and 325 basis points above the Federal Reserve's 2.25 percent target rate.

The zloty rose to 3.5375 per euro by 3:25 p.m. in Warsaw, from 3.5393 late yesterday. Poland's zloty climbed to a six-year high against the euro on February 28 after the central bank raised its main interest rate and said inflation may accelerate faster than its earlier forecast. Since then it has fallen back slightly.

But since August last year the zloty has rosen considerably, rising by 2.3 percent during February alone, making it the second-best performing emerging-market currency in Europe, after the Czech koruna.

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