Czech Koruna: CNB stance leaves room for weakness against Euro – ING

ING’s Frantisek Taborsky notes that the Czech National Bank (CNB) blackout period has started, with Deputy Governor Zamrazilova signalling a preference to keep rates unchanged at next week’s meeting. Despite a rates sell-off, the interest-rate differential has narrowed and EUR/CZK has moved back above 24.250. ING’s models see the pair as fair, but warn a more dovish CNB decision could push EUR/CZK higher.

CNB signals steady rates into meeting

"In the Czech Republic, the CNB blackout period begins today."

"Deputy Governor Eva Zamrazilova, one of the board’s most hawkish members, said yesterday that she favours keeping rates unchanged at next week’s September meeting, strongly signalling the likely outcome for the broader board."

"The CNB could still communicate today, but surprises appear unlikely. Despite the ongoing rates sell-off, the interest-rate differential has narrowed and, in line with our Monday call, EUR/CZK has moved back above 24.250."

"The pair is currently consistent with the rates move in our models, although a more dovish CNB decision than markets expect next week could push it higher."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)