The CNB paints a rosy picture, but the economy shows the opposite – ING

On Friday, the calendar is empty in the region, except for the minutes of the Czech National Bank. Last week, the central bank for the first time slowed the rate of reduction from 50 bps to 25 bps, notes Frantisek Taborsky, ING’s currency strategist.

Economic data continues to surprise on the downside

“The forecast showed only limited scope for rate cuts, well above current market prices, and the governor did not provide any early guidance on what to expect next. So the minutes might give some indication of where the discussion is in the council. However, we can expect minutes to be more of a driver of current prices at 3.60% later this year, implying 90bp rate cuts.”

“CZK was the only currency to strengthen over the past week and we still see potential for continued growth here, especially if the market re-evaluates current expectations. On the other hand, economic data continues to surprise on the downside, which will make the central bank behind the curve and the market will have reason to keep some rate cuts, capping the CZK.”