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CNB's Holub Says Debate Will Now Focus On Whether To Slow Monetary Easing

CZECHIA
EM BulletHomepagemarkets-real-timeBulletEmerging Market NewsBond Market News
  • CNB's Tomas Holub said that Czech interest rates will likely decline further and the debate will now revolve around the question of whether to slow the pace of easing "in June or sometime later." Holub noted faster-than-expected wage growth is an argument in favour of a smaller rate cut this month, but this could be offset by the fact that the koruna is trading at stronger levels than had been projected by the CNB. Last month Holub voted along all the other Bank Board members to cut the two-week repo rate by 50bp, despite considering voting for a 75bp cut.
  • This comes after Czechia's CPI inflation slowed more than forecast in May, printing at +2.6% Y/Y versus +2.8% expected. Although headline inflation was 0.1pp above the CNB's forecast, core inflation came in at +2.5% Y/Y versus +2.7% pencilled in by the central bank's staff.
  • Czechia will sell up to CZK3bn of 4.5% 2032, up to CZK3bn of 4.9% 2034 and up to CZK1bn of 1.95% 2037 bonds at an auction today.
  • Prime Minister Petr Fiala and other government officials will speak at a conference about strategic investments and development plans.
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  • CNB's Tomas Holub said that Czech interest rates will likely decline further and the debate will now revolve around the question of whether to slow the pace of easing "in June or sometime later." Holub noted faster-than-expected wage growth is an argument in favour of a smaller rate cut this month, but this could be offset by the fact that the koruna is trading at stronger levels than had been projected by the CNB. Last month Holub voted along all the other Bank Board members to cut the two-week repo rate by 50bp, despite considering voting for a 75bp cut.
  • This comes after Czechia's CPI inflation slowed more than forecast in May, printing at +2.6% Y/Y versus +2.8% expected. Although headline inflation was 0.1pp above the CNB's forecast, core inflation came in at +2.5% Y/Y versus +2.7% pencilled in by the central bank's staff.
  • Czechia will sell up to CZK3bn of 4.5% 2032, up to CZK3bn of 4.9% 2034 and up to CZK1bn of 1.95% 2037 bonds at an auction today.
  • Prime Minister Petr Fiala and other government officials will speak at a conference about strategic investments and development plans.