PLN Weakens Following CPI Announcement
• Polish CPI Falls In December.
• PLN Depreciates Even With Lower Inflation.
USD/PLN strengthened following the larger than expected drop in Polish consumer prices yesterday. Poland’s consumer price index CPI year-on-year fell further than leading economists’ expectations of -0.90 percent and came in at -1.00 percent for December 2014, compared to -0.60 percent for the same month in the previous year. CPI month-on-month data also fell at a larger than expected rate of -0.20 percent and instead registered at -0.30 percent, beating out November 2013’s reading of -0.20 percent according to the Central Statistical Office of Poland.
The larger than expected decrease in consumer price inflation stemmed from transport costs which declined 2.4 percent annually, followed by clothing and footwear which decreased by 1.1 percent. Even with such a decrease in consumer prices, the central bank of Poland kept interest rates unchanged on Tuesday. Investors should expect further interest rate cuts in the foreseeable future, especially if deflation continues to wreak havoc throughout Europe.
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