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CNB Minutes Confirm Hawkish Tilt, Pushing Back on Rate Cut Expectations

CZECHIA

CNB Minutes highlights:

  • Board unanimously disagreed with baseline scenario, which assumes rates would start to come down in Q3
  • Board sees outlook for core inflation at around 3.5% in 2024 as one of the main arguments for keeping policy tighter over an extended period
  • Members Holub, Kubelkova and Prochazka cite CZK weakness as a minor upside risk to inflation
  • The majority among the board agreed fiscal policy remains a substantial upside risk to inflation

Hawkish overtones very much present in the CNB minutes (as expected) and inline with Kubicek's TV appearance late yesterday. Minutes unanimously disagreed with baseline that saw cuts from Q3, strengthening Kubicek's messaging that easing likely around year-end/early 2024.

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