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CNB: Central Bank Staff See Diminishing Inflationary Risks

CNB
CEEMEAEM BulletCzech RepublicBulletGlobalEmerging Market NewsRegion

Senior CNB analyst Musil says that the new forecast shows that EUR/CZK should average at 25.2 in 3Q2024. The central bank expects that after stagnating into the year-end, the koruna will appreciate slightly due to favourable net exports and continued growth in economic activity. Koruna appreciation will be dampened by a narrowing rate differential with the EZ.

  • The expected rate trajectory is little changed vis-a-vis the previous forecast until 2H2025, at which point it deviates slightly to the upside. As a result, the interest rates path is on average slightly higher than before.
  • CNB's Musil says that "the Inflation and Monetary Policy Risks Scoreboard is indicating diminishing inflationary risks (especially due to diminishing long-term inflation trends and monetary and fiscal indicators)".
  • Musil adds that "there is a gradual easing of the pro-inflationary risk in the area of deficit spending by the government for this year" but warns that inflation expectations remain well above the +2.0% Y/Y target, especially among firms.
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Senior CNB analyst Musil says that the new forecast shows that EUR/CZK should average at 25.2 in 3Q2024. The central bank expects that after stagnating into the year-end, the koruna will appreciate slightly due to favourable net exports and continued growth in economic activity. Koruna appreciation will be dampened by a narrowing rate differential with the EZ.

  • The expected rate trajectory is little changed vis-a-vis the previous forecast until 2H2025, at which point it deviates slightly to the upside. As a result, the interest rates path is on average slightly higher than before.
  • CNB's Musil says that "the Inflation and Monetary Policy Risks Scoreboard is indicating diminishing inflationary risks (especially due to diminishing long-term inflation trends and monetary and fiscal indicators)".
  • Musil adds that "there is a gradual easing of the pro-inflationary risk in the area of deficit spending by the government for this year" but warns that inflation expectations remain well above the +2.0% Y/Y target, especially among firms.