Czech Interest Rate Announcement (May)

The communications accompanying the decision by the Czech National Bank to cut its policy rate by 50bp again today (to 5.25%) were slightly more hawkish than expected, but we still think that a further fall in inflation over the coming months will convince policymakers to lower interest rates to 3.50% by end-year. That’s a more dovish view relative to market pricing.

This publication has been updated with additional analysis since the post-meeting press statement and press conference.