ING expects the Czech National Bank to maintain rates while signaling a more cautious stance despite July inflation rising to 1.7% YoY.
The Czech National Bank is expected to keep its key rate unchanged at 3.75% at today’s meeting, following June’s hike, which marked the only tightening in the CEE region. July inflation rose to 1.7% year-on-year, up from 1.5%, with core inflation steady at 2.8-2.9%, limiting pressure for further action.
Markets currently price in two additional hikes, the most in EMEA, but the CNB’s guidance is anticipated to lean dovish relative to expectations. Services inflation edged up to 4.7% YoY, while lower food prices offset higher fuel costs, creating a mixed inflation outlook.
ING strategists forecast EUR/CZK to trade around 24.20–24.25, citing persistent tightening expectations as a drag on the koruna’s strength.