MNI CNB Review - June 2024: Last 50bp Cut In This Cycle?
The Board voted 5-2 to cut rate by a larger-than-expected 50bp but said it may slow to 25bp or pause at the next meeting.
Executive Summary:
- The CNB voted 5-2 in favour of a 50bp rate
cut, defying consensus.
- The Board guided that next move will be a
25bp cut or a pause.
- Governor Michl refused to categorically
rule out a larger cut.
The Czech National Bank (CNB) had telegraphed in advance that this meeting would boil down to a binary decision between a -25bp and -50bp adjustment to the two-week repo rate. However, it still managed to wrongfoot consensus by shaving half a percentage point off the policy rate in a 5-2 vote (two dissenters sought a 25bp cut) instead of reducing the pace of easing. At the same time, the Board made it clear in the statement that it would likely switch to 25bp cuts or pause them altogether in August. On the other hand, Governor Aleš Michl refused to categorically rule out another 50bp cut at the CNB’s next rate meeting.