The continued strong run of Czech wage data has been driven by a tightening of labour market conditions. With labour shortages continuing to mount, wage growth is set to remain rapid over the coming quarters, keeping inflation above the central bank’s target. As a result, we have revised up our interest rate forecast – we now expect the policy rate to end next year at 1.75% (our previous forecast was 1.00%), up from 0.50% at present.
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