Interest rate market

The bull market in bonds began in January and lasted almost uninterruptedly until the end of October 2014.

The year 2014 was characterised by high increases in the prices of Treasury bonds and, consequently, drops in their yield. The main reason was a strong disinflationary trend driven largely by drops in the prices of raw materials, which led to a drop in the annual inflation growth rate below zero in the second half of 2014. The bull market in bonds began in January and lasted almost uninterruptedly until the end of October 2014.

This trend was stopped when, a month after a 50-point cut and the announcement of further reductions in interest rates, the Monetary Policy Council (RPP – Rada Polityki Pieniężnej – ‘MPC’) unexpectedly refrained from easing the monetary policy. The return to decreases in yield took place in December in response to strong drops in oil prices and suggestions of the European Central Bank concerning the launch of a new quantitative easing programme at the beginning of 2015. Throughout the year the yield on 2-year Polish bonds dropped from 3.05% to 1.79%, the yield on 5 year bonds fell from 3.64% to 2.14%, whereas the yield on 10-year bonds dropped from 4.35% to 2.52%.