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Markets Forecast CNB Cash Rate To Rise To 0.5% By Year-End (From 0.25%)

CZECHIA
  • Median year-end economic forecast for the CNB cash rate: 0.5% (from current 0.25%).
  • Policymakers mentioned in March that the worsening Covid situation in Q1 could lead to a 'need to keep the monetary conditions accommodative for rather longer than in the forecast', which previously assumed 3 hikes for 2021.
  • As a reminder, CPI inflation rose to 2.3% in March, still standing within the 1%/3% tolerance band.
  • As for other economies in the CEE region, inflationary pressures are expected to temporary spike in the coming months before starting to ease down in the second half of this year towards the 2-percent CNB target.
  • Based on the current available projections, the market expects CPI inflation to average 2.3% in 2021 and 2.2% in 2022, respectively.

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