The Czech crown and Polish zloty will likely lead central and eastern European currency gains in 2024 as interest rate cuts go slower than some bet while Warsaw's moves to unblock European Union funds will also cheer investors, a Reuters poll found. Poland's zloty led the region in 2023 by rising nearly 8% against the euro, with the bulk of those gains coming after a broad alliance of pro-European Union parties won a majority in an October election. At the same time, the Polish central bank paused an interest rate cutting cycle in the final months of 2023 and analysts expect it could stay on hold for the first half of 2024.
The National Bank of Poland (NBP) will hold a policy meeting later on Wednesday, after it stunned markets with a shock rate cut in September, which sent the zloty tumbling at the time. The majority of economists polled by Reuters expect the NBP to cut interest rates further amid falling inflation and less than two weeks before parliamentary elections. The NBP will ease rates by 25 basis points to 5.75%, according to 17 of the 26 poll respondents.
With Poland's monetary policy council slashing rates three times more than what the market had expected and bets on the Czech central bank to begin easing policy rose as inflation continued to fall, Hungary's interest rates, the highest in the European Union, remained attractive to investors. A Warsaw-based trader said buying forints for zlotys has been popular since last week.