CZK: CNB cuts rates but provided nothing new – ING
|The Czech National Bank (CNB) reduced interest rates by 25bp to 4.25%, as anticipated. The CNB’s press conference offered little new information, disregarding the Federal Reserve’s decision and refraining from commenting on market pricing, ING’s FX strategist Frantisek Taborsky notes.
EUR/CZK to decline in the short term
“Of course, the Fed rate cut and dovish global outlook will be visible in the November forecast in a downward revision of the rates path. On the other hand, the next catalyst is September inflation, which only mechanically points to 2.6% based on the previous deviation from the CNB forecast.”
“That's also what some of our numbers show, despite the drop in fuel and energy prices, which would bring the CNB to an uncomfortable level given another base effect jump in December, raising the chance of inflation returning to 3%. This is why our economists expect a pause in December.”
“From that perspective, we face a hawkish risk over the next two months, while the market leans dovish in our opinion. Paying CZK rates seems challenging in the current environment, but an inflation print could change that. Given this hawkish stance, we still anticipate EUR/CZK to decline in the short term, as suggested by the current rates differential.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.