Markets price in additional tightening in Poland and Czech Republic, reversing cuts in Hungary, as oil and gas costs spike.
A sharp rise in oil and gas prices has triggered a hawkish repricing of policy rate paths in Poland, the Czech Republic, and Hungary. Markets now imply an extra 90 basis points of tightening in the Czech Republic and 70 basis points in Poland, while Hungary’s expected cuts have been halved to just two by year-end.
The repricing brings implied rates back to or above levels seen during March-April stress peaks. Despite the shift, economists maintain unchanged forecasts: no rate changes in Poland or the Czech Republic, and Hungary’s benchmark rate falling to 5.00% by year-end. The move reflects stop-losses on receiver positions and broader positioning reversals amid geopolitical tensions.
Higher market rates may provide some support for regional currencies, which have faced pressure from a stronger Dollar and risk-off sentiment. The repricing could continue unless energy prices stabilize or geopolitical risks ease.