The majority of the market expected only a 25bp change, but there were speculations about a 50bp cut. The strength of the Czech koruna, the outlook for a pronounced deceleration of the Czech economy and a disinflationary trend provide enough room for such a rate cut. On the other hand, the volatility of the CZK suggested that the CNB could have been more cautious. Also over the past days several CNB board members said they could more easily imagine a 25bp rate cut or no change rather then a bigger rate cut. However, if the CZK was not to correct significantly, even more rate cuts could be in the pipeline. More information on the future development of CNB's monetary policy should be provided on the press conference later today, which includes the announcement of the new inflation forecast of the CNB.
The CZK reacted by depreciating from EUR/CZK 24.70 to 24.90.
Quelle: Raiffeisen RESEARCH
