The President of the National Bank of Poland’s conference has pushed back the prospect of rapid interest rate cuts in Poland. In China, deflation was recorded in both consumer and producer prices. The cryptocurrency market experienced more unusual movements.
Adam Glapiński supported the Polish złoty
At the press conference, we learned that the decision taken was the best possible. Two issues were cited as reasons. On one hand, there was mention of less room for further rate cuts, and on the other, an increase in uncertainty regarding the decline in inflation. What does this actually mean? Essentially, it means that after the full percentage point reduction in September and October, the inflation projections were updated, and as a result, we should not see the inflation target without strong external stimuli until 2024, and only towards the end of 2025. It is important to remember that the target is only three percentage points away, which is not a chasm. It was also pointed out that the current cuts could force hikes in mid-2024. The markets have updated their expectations according to the president’s words. Since we are not lowering interest rates, the złoty will pay better returns on lower-risk instruments. Consequently, it is not surprising that after the president’s words, the euro exchange rate against the złoty was falling.
Price Changes in China
It’s hard to argue that things are different in the Middle Kingdom compared to the West. Yesterday, we learned about the change in prices in China. Deflation, a year-over-year price decrease, turned out to be higher than expected. Consumer prices are falling by 0.2% annually. Producer prices are dropping by 2.6%. This is a stark contrast to what is happening in our part of the world. On the other hand, it should be remembered that China’s policy in stimulating the economy was much more cautious during the COVID-19 pandemic. At that time, this was associated with certain problems. Now, however, they are not fighting an inflationary plague.
Heat on the Cryptocurrency Market Again
Yesterday we witnessed a sharp increase and an even more dramatic decrease in the price of the world’s most popular cryptocurrency. In the afternoon, on the wave of information about possible further positive steps towards opening the first ETF-type crypto fund. Such approval is supposedly to come next week. Why were the increases so strong? The price surge caused short-position speculators to close their positions, and in doing so, they had to buy back ‘coins’, which only deepened the upward movement. However, when there was no further ‘fuel’ for this increase, it quickly became apparent that the price was not an equilibrium price and a return movement began. As a result, investors betting on the price drop, who were forced to close their investment positions, lost a lot of money yesterday.
Maciej Przygórzewski – Chief Analyst at InternetowyKantor.pl and Walutomat
