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GS On CNB Tightening Policy

CZECHIA
  • The CNB has now increased rates by a total of 350bp from the pandemic trough, taking the policy rate to a 13-year high.
  • The move followed continued upside surprises to inflation in recent months and incoming data pointing to various upside risks, raising concerns with regard to a potential de-anchoring of inflation expectations.
  • Given recent public commentary from various CNB MPC members and no sign of slowing inflation, further tightening appears likely in the coming months.
  • GS analysts expects Czech policy rates to rise from +3.75% currently to +4.25% in 2022Q1, and they continue to view the risks around this forecast as skewed to the upside.

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