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NBP Surprising Hike Leads To Further Flattening

POLAND
  • NBP Governor Glapinski mentioned in the press conference that inflation should peak in January 2022 above 7% and that the MPC board is doing whatever to curb the inflationary pressures.
  • As expected, Glapinski did not clarify if the NBP will continue its tightening cycle in the coming meetings.
  • However, today's meeting showed that NBP doves are 'less powerful' than market expected.
  • The NBP surprise led to a sharp flattening of the 2Y10Y yield curve, currently trading at 60bps (March 2020 levels), down nearly 100bps in the past month.
  • Rising uncertainty (Covid cases and delay in EU funds) could lead to further flattening in the near term, increasing investors' concerns over economic outlook.

Source: Bloomberg/MNI

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