Hawkish CNB message should support the Koruna through the coming month – Commerzbank

The Czech National Bank (CNB) is expected to leave rates unchanged in its meeting today. Willingness to hike rates in the future should support Koruna in the coming month, economists at Commerzbank report.  

CNB on hold

“We do not expect the bank’s board to use any dovish arguments whatsoever today; rather, we expect it to reiterate that rates need to be kept high for some time longer.”

“Hawks will repeat their argument for one more rate hike – while, an actual rate hike is unlikely in this cycle, the sum total of such signals will convey the message that this central bank stands ready and willing to change its (pause) stance and return to hiking rates if the exchange rate were to need defending. And, this message should support the Koruna through the coming month.”