EUR/CZK: CNB’s decision could be the difference between returning to 24.60 or 24.20 – SocGen

FXStreet Insights Team FXStreet

Economists at Société Générale analyze how the Czech Central Bank decision could impact the EUR/CZK pair.

A close call between no change and a 25 bps cut

For the Czech National Bank, it could be a close call between no change and a 25 bps cut. Most economists surveyed by Bloomberg are pencilling in a first rate cut. We are in the minority camp and predict a first reduction in February 2024.

Headline CPI decelerated to 7.3% in November after topping out at 18% in September 2022. The base line forecast of the CNB is for inflation to slow below 3% in 1Q24. The dilemma is whether to wait (maintain positive real rates) or trust the forecast and cut today.

For EUR/CZK, today’s decision could be the difference between returning to 24.60 or 24.20.

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FXStreet Insights Team

FXStreet

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