(Bloomberg) -- Poland’s central bank cut interest rates for a second consecutive month, lifting the zloty after an unexpectedly large reduction last month triggered a selloff and prompted policymakers to advocate for more caution.
The decision to lower the main rate by a quarter percentage point to 5.75% on Wednesday was in line with forecasts from 16 of 33 economists surveyed by Bloomberg.
The shock September cut sent the currency into its deepest slump since Russia invaded Ukraine almost 20 months ago and prompted Governor Adam Glapinski to say room for more easing had narrowed significantly. The government also warned it may intervene to stabilize the currency.
The zloty gained as much as 0.9% and was trading at 4.6037 per euro at 3:34 p.m. in Warsaw.
The cuts have sparked criticism that the central bank is acting out of political expediency to help the ruling Law & Justice party win Oct. 15 parliamentary elections. Glapinski has pushed back, saying inflation will continue to slow in the coming quarters. He will brief media at 3 p.m. on Thursday.
“Too much optimism about the pace of disinflation may raise concerns about excessive rate cuts in the coming months,” Rafal Benecki, chief economist at ING Bank Slaski SA said in a note.
Price growth eased for seventh straight month to an annual 8.2% in September from the fastest pace in a quarter of a century earlier this year. However, inflation is being held in check to a large degree by state-refiner Orlen SA’s attempt to lower fuel prices at the pump before the ballot.
Economists were split going into the meeting, highlighting the uncertainty sparked by last month’s decision. Nine expected a 50 basis-point cut and one was betting on a repeat of September’s three-quarter point move. Seven economists predicted no change.
--With assistance from Piotr Bujnicki, Maciej Martewicz, Wojciech Moskwa, Barbara Sladkowska and Kerim Karakaya.
(Updates with currency reaction from the first paragraph.)
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