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CNB Preview: CNB To Hike Policy Rate To 5.5%

CZECHIA

Executive Summary:

  • The CNB is likely to raise its benchmark rate by 50bps to 5.5% at its next meeting on May 5 to continue its ‘fight’ against inflation, which is expected to remain elevated longer than what policymakers previously estimated.
  • While some analysts expect this week’s hike to be the last one, other sell-side analysts are pricing in a terminal rate at 6% (STIR market pricing in a terminal rate between 6% and 6.25%).
  • The other area of focus at this week’s meeting will be whether the CNB turns more open to using the exchange rate more actively as a policy tool.

Link to full publication:

CNB may5.pdf

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Executive Summary:

  • The CNB is likely to raise its benchmark rate by 50bps to 5.5% at its next meeting on May 5 to continue its ‘fight’ against inflation, which is expected to remain elevated longer than what policymakers previously estimated.
  • While some analysts expect this week’s hike to be the last one, other sell-side analysts are pricing in a terminal rate at 6% (STIR market pricing in a terminal rate between 6% and 6.25%).
  • The other area of focus at this week’s meeting will be whether the CNB turns more open to using the exchange rate more actively as a policy tool.

Link to full publication:

CNB may5.pdf

Keep reading...Show less