CNB: Czech Central Bank Recalibrates Forecasting Model

CNB Macroeconomic Forecasting Division Director Karel Musil presents the new forecast as we type, noting that the changes relative to the previous forecast were relatively modest, but staff tweaked some assumptions on Czech economy equilibria that were incorporated into the forecasting model through expert adjustments.

• Musil says that the new forecast assumes a slower potential GDP growth and a slower equilibrium pace of koruna appreciation. The next forecast will be prepared using this recalibrated model. Specifically, CNB staff cut potential GDP growth to +2.5% from +3.0%, cut equilibrium nominal wage growth to +4.5% from +5.0% and reduced the equilibrium pace of koruna appreciation to +1.0% from +1.5%.

Table 1. Changes To Assumed Equilibrium Y/Y Growth Rates