CNB: Minutes Confirm Holub & Zamrazilova As Dissenters

The minutes of the CNB's monetary policy meeting held last week revealed that outgoing member Tomas Holub voted for a 50bp rate cut, while Deputy Governor Eva Zamrazilova unsuccessfully sought a pause. The Bank Board eventually decided to reduce the policy rate by 25bp.

• The document noted that "Eva Zamrazilova agreed, saying that the new forecast even saw inflation rising slightly above the upper boundary of the tolerance band in the coming months, and that a potential correction of volatile price items could not be relied on. She therefore felt it was important to take a cautious approach to monetary policy decision-making and to keep monetary policy tight for longer." She "additionally pointed out that the new inflation forecast was above the 2% target until mid-2026, a year longer than predicted by the previous forecast." In addition, she " felt that the markedly weaker koruna exchange rate than in the previous forecast – despite being due partly to a reduction of the assumed equilibrium real appreciation rate in the core forecasting model – was sufficient grounds for putting the rate-cutting process on hold."
• "By contrast, Tomas Holub said that the new forecast did not cast doubt on the fulfilment of the 2% target at the monetary policy horizon and meanwhile assumed that the two-week repo rate would be 0.75 percentage point lower than its current level in the first quarter of next year. Moreover, had the forecast not contained an expert adjustment in the form of a reduction of the decline in foreign interest rates relative to their market outlook, it would have implied an even larger decline in domestic interest rates."