Czech National Bank Preview

The Czech National Bank is expected to hike interest rates in June due to persistent core inflation and hawkish communication. This comes despite ING's view that the economy does not currently require tighter policy.

Key Takeaways

• 1.The Czech National Bank is expected to raise interest rates in a split vote on June 18th, driven by persistent core inflation and hawkish communication.
• 2.Despite the expected hike, the current economic state does not necessitate tighter monetary policy given headline inflation remains near target.
• 3.Market pricing for CZK rates is the most hawkish in the EMEA region; a rate hike is expected to support a stronger Czech koruna.

Table of Contents

• Headline close to target while core inflation still upbeat
• Inflation set to ease next year
• Chekhov's gun rule suggests a rate hike
• Real interest rates set to hover in restrictive area
• Indirect connotations
• Hormuz will likely pressure economic activity
• Our market view

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