Czech MPC hints at early koruna cap exit

We think the next Czech MPC meeting on 4th May is the most likely date for a lifting of the koruna cap, but today’s comments by the Council have raised the risk that it happens outside of a scheduled monetary policy meeting (perhaps as soon as next month). The scale of recent speculation on the currency means it could initially rise sharply when the cap ends, overshooting ‘fair value’. Ultimately, however, we expect it to end the year at around 25.5/€ (5.5% stronger than its current rate).