The Czech National Bank raised interest rates by 25bp to 3.75% in June, citing strong domestic demand and wage growth. ING expects rates to hold steady hereafter unless core inflation trends higher.
Key Takeaways
- 1.The Czech National Bank (CNB) raised policy rates by 25bp to 3.75% in June, primarily driven by strong domestic wage dynamics and core inflation.
- 2.ING views the rate hike as an 'insurance move' and expects no immediate further changes unless core inflation unexpectedly accelerates.
Table of Contents
- Labour market and credit are pro-inflationary
- Real interest rates to move above 1%
- Likely not a genuine hiking cycle
- Fuel prices to push headline inflation lower
- Headline inflation to hover around the target
- Headline and core rates go their own way
- Producer prices in agriculture remain in decline
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Authors
David Havrlant
Themes
Monetary Policy TighteningWage Inflation
Regions
EuropeCzech Republic