Czech Koruna: CNB path lifted on inflation risks – Standard Chartered

FXStreet Insights Team FXStreet

Standard Chartered’s Saabir Salad now expects the Czech National Bank to deliver two additional 25bps hikes, in November 2026 and Q1-2027, after a pre-emptive move in June. This would lift cumulative tightening to 75bps and the policy rate to 4.25% by end-Q1-2027. The bank also raises its 2027 CPI inflation forecast to 2.6% from 2.0% as Middle East risks persist.

Rate ceiling revised higher

"We now expect the Czech National Bank (CNB) to deliver a 25bps hike in November 2026 and another in Q1-2027; we previously saw no further hikes this year or next. Along with the 25bps pre-emptive hike in June, this would take cumulative tightening to 75bps, reaching a policy rate ceiling of 4.25% by end-Q1-2027."

"Markets are more hawkish than we are, pricing more than 100bps of tightening over the next 12 months. We think the CNB may be comfortable allowing some of this hawkish market pricing to persist."

"If this effect is strong enough, the CNB may not need to deliver all of the tightening priced in by markets. We therefore see balanced risks to our call."

"Domestically, core inflation – the key metric for policy makers – has remained elevated this year at around 3%, the upper bound of the central bank’s target range. Externally, the outlook will depend on the Middle East conflict, particularly its implications for energy prices."

"The rate paths of major central banks are also important: a more hawkish Fed and ECB would increase the likelihood of further CNB tightening beyond November, while a dovish repricing could allow the CNB to remain on hold after a November hike."

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

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD remains depressed 0.7000, awaits FOMC Minutes

AUD/USD struggles to capitalize on its recent recovery move and trades with a negative bias below 0.7000 in Wednesday's Asian session. Amid geopolitical uncertainty, the US Dollar attracts some dip-buyers after a fresh leg up in US bond yields, keeping the pair under pressure despite hawkish RBA expectations. All eyes now remain on the FOMC Minutes.

USD/JPY holds firm near 158.50 ahead of Fed Minutes

USD/JPY hangs close to a one-and-a-half-week high near 158.50 in the Asian session on Wednesday, with bulls now awaiting a move beyond the 200-day SMA hurdle before positioning for further gains ahead of the FOMC Minutes. Meanwhile, a fresh leg up in US bond yields revives US Dollar demand amid geopolitical uncertainties, boosting the pair amid dovish BoJ commentary.

Gold struggles below $4,150 as USD bulls look to FOMC Minutes for rate hike cues

Gold retains its intraday bearish bias through the early European session, eyeing a two-month low around the $4,100 neighborhood touched the previous day. The US Dollar catches fresh bids after Tuesday's corrective slide and is seen as a key factor weighing on the commodity as traders look to the FOMC meeting minutes for a fresh impetus.

Dogecoin extended correction and weakening momentum raise downside risks

Dogecoin extends its losses, trading around $0.090 down more than 5% so far this week. Bearish pressure is strengthening, with short positions reaching a one-month high and traders in overheated conditions. Meanwhile, weakening momentum indicators are also hinting at further losses in DOGE. Derivatives data shows cautious signals among traders.

Indian Rupee hits fresh four-month low, RBI hikes Repo Rate to 5.5%

The Indian Rupee weakens significantly against the US Dollar after a muted response, following the Reserve Bank of India’s monetary policy meeting on Wednesday. The USD/INR pair jumps to near 96.72, the highest level seen in four months. In the policy meeting, the RBI decide to hike its Repo Rate by 25 basis points to 5.5%, the first hike since February 2023.

Eurozone inflation just hit 3.8%, its highest in three years. This chart shows why the ECB can’t simply hike its way out

The ECB would normally have a relatively straightforward answer to inflation running almost twice its target: raise interest rates. But these are not normal circumstances. This time, the bond market is already doing part of the tightening for it, leaving the ECB facing an increasingly difficult dilemma.