Inflation to slow This year, the average inflation rate should fall below 2% due to cheaper food, weaker demand and lower import prices.

The CNB to remain in wait-and-see mode until fourth quarter We expect the central bank to implement a first rate hike in 4Q21. This should mark the start of a gradual normalisation of monetary policy over 2022.

The economic recovery will support the koruna back to stronger values Positive sentiment on an earlier increase in the CNB's interest rates in combination with vaccinations and improving financial market prospects will lead to a rapid strengthening of the koruna's exchange rate. At the end of this year, the EURCZK should almost reach pre-pandemic levels.

Monetary and fiscal policy will push yields and rates up The prospect of gradual vaccinations and the return of the economy to normal are accelerating the start of monetary policy normalisation. In conjunction with the expansionary fiscal policy and the record supply of government bonds, we expect continued growth in CZGB yields and market interest rates.