A Number of Factors Behind Sharp Move in Polish Rates Across Past Two Days

The Polish swaps curve has retraced sharply over the past two sessions, reflecting markets rushing to price in a more benign rates outlook from the NBP.

Factors behind the move include:

• Firstly, the smaller-than-expected NBP hike this week has driven expectations that the bank are close to the peak of their tightening cycle - this is something the bank had warned about in recent months, but markets looked through the warnings in light of considerable inflationary pressures.
• The government's decision to look more carefully into limiting the pass through of high energy prices to consumers. Few details were given, but the climate ministry is said to be discussing a wide range of different options.
• The government have also secured over 9mln tonnes of coal, that should go some way to displacing lost energy imports from Russia, helping stem prices which have surged as much as 150% on the year on a per MWH basis.