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CNB Terminal Rate Likely To Reach 5%

CZECHIA
  • Yesterday, CNB Governor Rusnok mentioned in an interview with Ekonom that it is 'hard to imagine' Czech rates above 5%.
  • He added that it is difficult to predict how much more the policy rate needs to be raised given the current environment.
  • CNB member Mora also mentioned during an interview that Czech rates may reach 4.5%/4.75% in the first quarter of 2022. 5% is less likely according to the policymaker.
  • We saw that CZK NEER (nominal effective exchange rate) is now trading at its highest level since August 2008 following the significant recent appreciation.
  • CZK strength has been beneficial for Czech policymakers as a strong domestic currency anchors inflation expectations.
  • Today, the government will meet to debate potential changes to pandemic measures as new infections rise (BBG).

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