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CNB: Prochazka Thinks February Cut Is In Play, Koruna Reacts With Depreciation

CNB
EM BulletCzech RepublicBulletEmerging Market NewsCentral and Eastern Europe

Bloomberg runs comments from CNB's Jan Prochazka, who said that the "fine-tuning" of Czech rates may resume next month, even as the outlook for monetary policy action is clouded by domestic and external risks. According to Prochazka, beyond February, the Bank Board will make monetary policy decisions on a meeting-by-meeting basis.

  • "Unless the January flash inflation number shows some extreme re-pricing, I think another rate cut is certainly possible. I can't speak for my colleagues, but I don't expect their views to be significantly different."
  • This comes after Deputy Governor Eva Zamrazilova said that the central bank could restart cuts in early 2025 after December inflation data came in weaker than expected.
  • Note that the CZSO will start publishing flash CPI reports from this year. The first such report will come out on the day of the Bank Board's next monetary policy meeting.
  • Prochazka was among the two dissenters (alongside Karina Kubelkova) who voted in favour of cutting the two-week repo rate by 25bp in December, while all other members preferred to keep in on hold, pausing the rate-cutting cycle.
  • EUR/CZK has crept higher in reaction to Prochazka's comments amid dovish CNB repricing (as indicated by a move in FRA contracts). The pair last deals +0.047 at 25.180, with the koruna moving to the bottom of the CE3 pile.
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Bloomberg runs comments from CNB's Jan Prochazka, who said that the "fine-tuning" of Czech rates may resume next month, even as the outlook for monetary policy action is clouded by domestic and external risks. According to Prochazka, beyond February, the Bank Board will make monetary policy decisions on a meeting-by-meeting basis.

  • "Unless the January flash inflation number shows some extreme re-pricing, I think another rate cut is certainly possible. I can't speak for my colleagues, but I don't expect their views to be significantly different."
  • This comes after Deputy Governor Eva Zamrazilova said that the central bank could restart cuts in early 2025 after December inflation data came in weaker than expected.
  • Note that the CZSO will start publishing flash CPI reports from this year. The first such report will come out on the day of the Bank Board's next monetary policy meeting.
  • Prochazka was among the two dissenters (alongside Karina Kubelkova) who voted in favour of cutting the two-week repo rate by 25bp in December, while all other members preferred to keep in on hold, pausing the rate-cutting cycle.
  • EUR/CZK has crept higher in reaction to Prochazka's comments amid dovish CNB repricing (as indicated by a move in FRA contracts). The pair last deals +0.047 at 25.180, with the koruna moving to the bottom of the CE3 pile.