CNB should stay ‘on hold’ in December – Danske Bank

Chief Analyst at Danske Bank Jakob Christensen assessed the recent decision by the Czech National Bank (CNB) and the prospects for the next meeting.

Key Quotes

“Yesterday, the Czech Central bank (CNB) hiked its policy rate by 25bp, as widely expected by the market and communicated by CNB. We saw some CZK weakness following the press conference, after governor Rusnok said the vote was unanimous, which may have disappointed some in the market who had speculated that some CNB members would have advocate a larger +50bp hike”.

“Given today’s relatively ‘non-hawkish’ tone, we do not expect another hike at the 21 December meeting and think it will wait until February 2018. Our view of EUR/CZK remains unchanged, although there are downside risks to our current forecasts from the recent move lower”.