Questions on securities

Monday - Friday 09:00-17:00

Quick guide

Choose your country

Research Detail

2021/04/14 / Erste Group Research

Central banks not rushing to tighten

Among CEE central banks, only the CNB gets hawkish; we expect two 25bp hikes delivered already this year. Central banks in Hungary and Poland will remain engaged in government bond purchases, which are likely to intensify in the next couple of months.

The pandemic crisis left a negative mark on public finances. Deficits climbed to 8% of GDP in CEE on average, while public debt to GDP ratios increased even more, by 11 percentage points on average last yer. Public debt ratios should stabilize or fall next year, except for in Czechia and Romania, which should keep their debt ratios well below 60% of GDP. CEE countries have managed to improve their debt maturity profiles while locking in relatively low borrowing costs. The average maturity was extended to 6.8 years as of end-March, from 6.2 a year ago.

The improved global economic outlook, which triggered reflation trades and moved yields higher on both global and emerging bond markets, left its mark on the CEE bond market as well. 10Y government bond yields went up 60bp in Czechia and Hungary compared to the beginning of year. Not all countries experienced an increase of yields in 1Q. In Croatia and Serbia, where inflation remained relatively muted, government bond yields even slightly declined. Among CEE central banks, only the Czech National Bank gets hawkish, although in the last couple of weeks it has started to downplay the urgency of hiking. We expect two 25bp hikes delivered already this year (in August and November). Base rates should remain on hold in other CEE countries this year, with the Hungarian central bank ready to increase the 1W deposit rate if needed.

Central banks in Hungary and Poland will remain engaged in government bond purchases, which are likely to intensify in the next couple of months, in order to prevent yields from any sharper increases triggered by reflation trades. The Romanian central bank has been using bond purchases only occasionally in small volumes so far as a backstop during ROMGBs sell-offs or periods of extremely low liquidity.

PDF Download Download PDF (1.4MB)

General information

AuthorErste Group Research
Product nameCEE Bond Market Report
Topic in focusFX, Macro/ Fixed income
Economy in focusCEE, Croatia, Czech Republic, Hungary, Poland, Romania, Serbia, Slovakia, Slovenia
Currency in focusCroatian Kuna, Czech Koruna, Euro, Hungarian Forint, Polish Zloty, Romanian Leu, Serbian dinar
Sector in focus-


We use cookies and web analysis software to give you the best possible experience on our website. If you consent, these tools will be used. For more details please read our Data protection policy.


Any information, material and services regarding financial instruments and securities provided by Erste Group Bank AG or any of its affiliates (collectively “Erste Group“) on this and any linked website hereafter (jointly the “Websites”) shall be exclusively to investors who are not subject to any legal sale or purchase restrictions (the “Interested Party“).

The publication and distribution of information as well as offering and selling of products and services described on the Websites is prohibited by law in some jurisdictions. For this reason, persons in countries in which the publication as well as the offering and selling of products and services described on the Websites are not permitted by law, must not enter the Websites and/or acquire the products displayed on the Websites.

Neither Erste Group nor any third party shall offer access to the Websites or offer the products to especially, but not limited to citizen/residents of the United States and “U.S. person” (as defined in Regulation S under the US Securities Act 1933 as amended). For this reason, the distribution or redistribution of the information, materials and products into United States or into any other jurisdiction where it is not permitted under the applicable law, as well as to the citizens/residents of these countries shall be prohibited. The securities displayed on the Websites have not been and will not be registered under the US Securities Act of 1933 and trading in the securities has not been approved for purposes of the US Commodities Exchange Act of 1936. For this reason the securities may, inter alia, not be offered, sold or delivered within the United States or, for the account and benefit of U.S. persons.

The Interested Party is solely responsible to examine, whether he may enter the Websites under the law applicable to it. Erste Group shall not be responsible for the distribution of content of any of the Websites to individuals or entities which provide false information about their right to enter the Websites. For this reason Erste Group shall not be liable for any legal claims or damages which may result from the unauthorized entering or reading of the Websites.

By agreeing to this hereto, the Interested Party confirms that
(i) It has read, understood and accepted this Information and the Disclaimer;
(ii) It informed itself about any possible legal restriction and warrants that it is not restricted or prohibited to enter the Websites according to any law applicable; and
(iii) It does not make available the contents of the Websites to any person who is not qualified by law to enter the Websites.