The Czech National Bank’s monetary council meets today, and there’s a real chance they could cut interest rates for the first time since 2020. Bloomberg writes that the 17 of the 23 economists it surveyed said it was likely that the country’s benchmark rate by 25 bps to 6.75%. Morgan Stanley’s economist Gerogi Deyanov said the decision would be “extremely close”.
“We believe that there is a marginally higher chance that the MPC will decide to engage in a smooth easing cycle rather than remain passive, and having to face the need for bigger rate cuts in the first half of 2024,” Deyanov said in a report.
Inflation rates in the non-euro nations of Central Europe far outstripped the Eurozone countries, but Poland and Hungary cut their rates months ago. Pressure on the Czech monetary officials has been mounting since the fall as the economy has cooled, but they seemed to fear stoking inflation more than recession. “We think that the bank board as a whole will emphasize the risk of de-anchoring of inflation expectations and, because of a cautious approach, will start lowering rates in 2024,” said Komerční bank economist Jan Vejemelek, according to Bloomberg.
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