CZK: Rate Remains Heavy Following Zamrazilova's Hawkish Remarks

Hawkish comments from CNB Deputy Governor Zamrazilova has applied pressure to PLN/CZK, helping the pair extend its move away from recent cycle highs. When this is being typed, the rate sits -260 pips at CZK5.0564, with bears looking for the 50-DMA (CZK5.0382) to give way.

• Eva Zamrazilova said in an interview that market rate-cut bets may be overdone and outlined conditions for starting discussions on monetary easing, which include inflation easing to single-digit levels and a review of wage and consumption data for Q2, which will only be available in September. The official also reiterated her support for a strong currency.
• By contrast, while a hawkish dissenter in the NBP's rate-setting panel reiterated his support for renewed monetary tightening, he conceded that Polish inflation is likely past its peak and should ease to single-digit levels this year. Besides these comments from Przemyslaw Litwiniuk, the NBP is generally perceived as the most dovish out of the CE3 central banks.
• 10-year POLGB/CZGB yield differential narrowed as Czech bonds remain under pressure despite recovery elsewhere in the region. This tightening impetus is in line with a trend observed since October last year.