MNI BRIEF: CNB Concern At Upside Risk, April Minutes Show

Upside risk inflation risks dominated discussions during the Czech National Bank’s May 2 meeting, minutes on Friday revealed, leading it to say easing could be slowed or ended at any time.

Members assessed risks as being “broadly neutral” to “modestly inflationary.” Most were concerned these could translate into stronger wage demands, stickier goods and services inflation, and accelerating lending, particularly in property.

Karina Kubelkova saw fewer and weaker upside risks than in February, with global rates repricing and its forex impacts “virtually the only upside risk, albeit a significant one.”

Jan Prochazka said the forecast meant the rate path had moved somewhat to the centre of the band, while Eva Zamrazilova “essentially agreed” with the path, but was inclined to cut more slowly. Karina Kubelkova supported cautious easing, with rates still restrictive after a reduction of 50bps. Tomas Holub and Jan Frait were prepared to consider a 0.75bp cut, though felt 50bp was more prudent.