The hawkish comments that accompanied today’s decision to leave Czech interest rates unchanged have pushed the koruna above 24/euro for the first time since October 2008. But while the chances of an interest rate rise at some point over the first half of this year have clearly increased, we still think policymakers will prefer to sit tight. Inflation is on course to drop back below target over the key policy-setting horizon of 12-18 months ahead and, with the recovery dependent upon the current strength of German industry being sustained, a pre-emptive rate hike could do more harm than good.