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CNB's Prochazka Shows Concern About Koruna, Czechia's Trade Surplus Misses Expectations

CZECHIA
  • The Czech National Bank (CNB) lowered its countercyclical buffer (CCyB) rate by 25bp to 1.75% amid the continued decline in systemic risks, following a pause in November, which came after two back-to-back 25bp cuts. According to the press release, "should the cyclical risks continue to disappear naturally from the banking sector’s balance sheets, the CNB is ready to lower the countercyclical capital buffer rate gradually further." The minutes of the meeting, including the vote split within the Bank Board, will be published in two weeks' time.
  • CNB's Jan Brochazka said that the central bank won't rush with monetary easing to avoid "scaring investors" and applying excessive pressure to the koruna. The official said that the exchange rate was a "big topic" for policymakers and a key reason for caution. Note that CNB members have been increasingly vocal about their sensitivity to koruna moves since Governor Michl took the market off guard by saying after the recent rate decision that the FX rate didn't play a fundamental role in deliberations.
  • Data from the CZSO this morning showed that Czechia's trade surplus shrank to CZK3.7bn in January from the revised CZK5.3bn prior, missing the CZK12.2bn consensus forecast. Unemployment stayed unchanged at 4.0% in February, in line with expectations.
  • National Security Adviser Tomas Pojar challenged President Petr Pavel's claim that Czechia managed to secure funding for its proposed programme to buy 800k artillery shells for Ukraine. Pojar noted that the President was probably talking just about the first batch of ammunition.
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