Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Executive Summary:
- Yesterday, the CNB decided to hike its benchmark rate by 125bps to 7% (in line with market expectations).
- It was the last meeting for CNB governor Rusnok, who will soon be replaced by 'dove' Ales Michl (taking over in July).
- With the new board pivoting to a more 'dovish' stance, CZK may weaken slowly against major crosses (i.e. EUR) as uncertainty over policy outlook could weigh on the koruna
Link to full review:
Yesterday, the CNB decided to hike its benchmark rate by 125bps to 7% (in line with market expectations). It was the last meeting for CNB governor Rusnok, who will soon be replaced by 'dove' Ales Michl (taking over in July). With the new board pivoting to a more 'dovish' stance, CZK may weaken slowly against major crosses (i.e. EUR) as uncertainty over policy outlook could weigh on the koruna. Some sell-side analysts are expecting a pause following today's decision, as further tightening will accelerate the economic slowdown.
The CNB statement showed that 5 policymakers voted to raise interest rates on Wednesday (vs. 2 unchanged, Dedek and Michl). The CNB still sees strong inflationary risks to forecast (i.e. surging energy prices, weaker FX ...) after inflation rose to 16% YoY in May, its highest level since 1993. Governor Rusnok mentioned during the press conference that FX market interventions are ‘auxiliary’ policy tool and prevent the koruna from weakening too significantly.
Source: Bloomberg/MNI
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.