CEE Interest Rate Report for June 28 – July 12

By: The Quinnipiac University Economics Research Team, Niamh Savage

Source: Eurostat and own calculations. Daily EMU convergence criterion bond yields (i.e., central government 10-year bond yields)


Throughout this time period, the most clear trend is a decline in all regional interest rates. Slovakia had the greatest variation, in percentage terms. Slovakia (pink line) had a large decline in interest rates at the beginning of the period, and their interest rates fluctuated after July 4th. The broad trend, on July 02, was a dispersion of currency movements. Czechia, Hungary, Poland, and Slovakia showed a decline in interest rates. The Romanian Leu (yellow line) showed a small increase in interest rates.


The large swing in Slovakian rates masks the fact the other interest rates also changed significantly. Compared to past periods, say, at the end of Spring when rates changes less than 1 percentage point over a week, even the relatively “tame” changes here are significant. Every rate but the Romanian rate changed by 10 percent or more during this period. Volatility has clearly been higher in the summer months.

Source: Eurostat and own calculations. Daily EMU convergence criterion bond yields (i.e., central government 10-year bond yields). The center line is a rolling three-month average. The upper and lower boundaries are the average plus and average minus one standard deviation, respectively, for the same three-month period.


Throughout this time period, many of the returns showed a decline, suggesting an increase in demand for their bonds and increase in prices. Relative to their own historical trends, the majority of the countries kept their interest rates below their historical boundary. This was predicted in InvestCEE’s The Global Interest Rate Challenge for Central European Economies; it forecasted that the interest rate will continue to lower, and the currencies will likely adjust to new levels. Romania ended the period closer to their lower historical boundary, so they may be in the process of adjusting to new levels.

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