Favourable Czech Inflation Sharpens Focus On June CNB Meeting

Czech headline inflation decelerated to 2.1% in May, prompting ING to forecast a hawkish hold from the CNB in June. Despite recent hawkish rhetoric, the potential economic impact of the Strait of Hormuz tensions supports a cautious wait-and-see approach.

Key Takeaways

• 1.Czech headline inflation slowed to 2.1% in May, aligning with CNB's spring forecast.
• 2.ING maintains a base case of no change to policy rates at the 18 June meeting, despite potential for a hawkish surprise.
• 3.Geopolitical risks stemming from the Strait of Hormuz create uncertainty that supports a wait-and-see monetary policy approach.

Table of Contents

• Headline and core inflation slow down
• Headline inflation is close to the target
• Wage dynamics also punchy due to revisions
• Waiting for uber-hawkish comments to adjust

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