Free Trial

Forward Rates Still Pricing Terminal Rate at 5% Despite Inflation Surprise

CZECHIA
  • Czech forward rates are still pricing in a terminal rate at 5% despite the positive surprise in inflation this week.
  • As a reminder, CPI inflation accelerated to 9.9% in January (vs. 9.3% exp.), up from 6.6% the previous month.
  • Inflation is likely to reach double digits in the short term according to CNB comments on Monday following the inflation release.
  • CZK FRA 3Mx6M is nearly unchanged this week and continues to trade slightly above 5%.
  • We previously saw that the CNB has now entered the late stage of its tightening cycle, and is likely to proceed with another 50bps hike at its next meeting on March 31, which would levitate the policy rate up to 5%.
  • Some sell-side firms are expecting two 25bps hikes, but chances of an 'large' have surged following inflation data.

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.