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Koruna Garners Strength, CNB's Holub Says Inflation Could Reach Target Within Months

CZK

EUR/CZK sold off this morning before finding a base at 24.434 and trimming losses. It last deals -0.047 at 24.492, with bears looking for a move through the former resistance area around the 24.3 figure. Bulls set their sights on 24.659/24.700, which capped gains on Sep 12, 2023/Sep 29, 2022 respectively.

  • CNB's Tomas Holub said that the Bank Board's debate will now be about how long to keep interest rates steady. He admitted that inflation may approach the +2% Y/Y target within a few months, but warned that the impact of traditional January price adjustments represents a key source of uncertainty. He added that if inflation indeed gets close to the target, then the current level of interest rates will become too restrictive.
  • The central bank trimmed its countercyclical capital buffer (CCyB) rate by 25bp yesterday. According to Komercni banka, this indicates that the Bank Board sees financial conditions as overly restrictive.

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