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Koruna Appreciates, Frait's Comments Reinforce Expectations Of Rate Stability


EUR/CZK is under mild pressure today, last trades -0.052 at CZK23.781. Worth noting that the pair posted a knee-jerk spike higher overnight, likely due to exceptionally thin liquidity, with no notable headlines crossing around that time. Technically, the focus now falls on CZK23.510, which limited losses on Jun 6. Bulls set their sights on Mar 17 high of CZK24.137.

  • CNB Deputy Governor Jan Frait told Bloomberg that the case for raising interest rates has weakened in the past weeks, with anti-inflationary signals prevailing despite "relatively strong" price pressures in some parts of the economy. His comments are set to reinforced expectations of an on-hold decision next week. At its previous meeting, the Bank Board voted 4-3 to keep interest rates unchanged, but Frait said his decision to back standing pat was "51 to 49" between a hold and a hike. In his most recent comments, Frait refused to rule out cutting rates this year, but said that it wasn't his baseline scenario.
  • Reminder that the CNB will announce its next monetary policy decision on Wednesday. Recent weeks have seen consensus align more tightly around the expectation of no change in rates, in light of relatively dovish macroeconomic data.

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