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Monetary policy divergence between CNB and ECB Could Support CZK

CZECHIA
  • Yesterday, economic data showed that current account deficit came in larger than expected at 16.8bn CZK (vs. 3.7bn exp.), up from revised 12bn CZK the previous month.
  • Parliamentary committee debates request to strip outgoing Prime Minister Andrej Babis of immunity from criminal prosecution (BBG).
  • The lower chamber of parliament is scheduled to discuss bills proposed by the outgoing government to address surging energy prices (BBG).
  • Yesterday, CNB Governor Rusnok mentioned in an interview that he sees terminal rate closer to 4% (than 3%) in 2022, implying that the central bank is far from done in hiking rates.
  • Rusnok added that he expects debate on a bigger than 50bps hike at the next meeting on December 22.
  • Monetary policy divergence between CNB and ECB could continue to support the CZK (over Euro) in the medium term.

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