Koruna Depreciation Resumes During Governor Michl's Presser

The tone of today's CNB monetary policy decision was more dovish than expected, with the Bank Board softening its messaging on several fronts. Despite some caveats (the assessment that inflation risks are tilted to the upside, pushback against current market wagers on the pace of the easing cycle), policymakers delivered some notable tweaks to their communications.

• The Bank Board formally ended the FX intervention regime (again, with some caveats) and modified its long-standing forward guidance (to no longer expect the next decision to be between a hold and a hike), while Governor Ales Michl conceded that the rate-setting panel could start discussing interest-rate cuts this autumn.
• EUR/CZK weakened during the Governor's press conference, but has struggled to re-test fresh cyclical highs printed on the initial press release. The rate last changes hands +0.265 at 24.230.
• Czech FRAs came under renewed pressure as the Governor spoke, with shorter-end contracts sitting near cyclical lows, with dovish players finding comfort in his latest comments.