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Morgan Stanley Sees Two More 75bps Czech Rate Hikes in 2021

  • Morgan Stanley sees two more 75bps Czech rate hikes this year, which would raise the policy rate to 3%.
  • Analysts then expect another two 25bps increases in the first half of 2021, followed by about 50bps of cuts in 2023 when inflation slows and the government scales back fiscal stimulus.
  • MS also remains bearish on CZK despite aggressive tightening cycle as "bullish koruna bets could disappoint as valuations and positioning are stretched".
  • EURCZK broke above its 200DMA resistance this week and is currently trading at its highest level since July; next resistance to watch on the topside stands at 25.93.

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