CZK: Czech National Bank's Last Discussion Before Rate Cuts

CZK: Last discussion before rate cuts

The Czech National Bank (CNB) will meet today to make its latest monetary policy decision and we believe it will be the last meeting before it begins to discuss the real possibility of rate cuts. This time there is no new central bank forecast and the board will only discuss an internal update on the situation. Our forecast remains unchanged – a first 25bp rate cut in November alongside a new central bank forecast. The main question today will therefore be whether the governor will indicate when to expect the first rate cut or leave no clues.

EUR/CZK is gradually sliding down with the market seeing that the CNB will not follow the NBP's actions. While it is clear that a rate cut is around the corner in the Czech Republic, we expect the board to adopt a cautious approach, which should support the koruna and erase losses after the sell-off triggered by the central bank's steps in Poland in early September. Thus, we expect EUR/CZK to end today safely below 24.40.