Strong wage growth has finally begun to pass through into inflation, while the exchange rate has depreciated on the back of the EM sell-off triggered by political turmoil in Italy and the initial trade skirmishes. The resurgence of inflation has induced hawkish talk from some board members. The common message is that CNB is likely to hike earlier than is indicated by the current forecast. This makes the upcoming June meeting much more interesting than we had previously thought. While we do not believe in a rate hike, we expect lively discussion and a hawkish outcome to the meeting. That said, the rate hike now looks closer than we previously expected. We expect the bank to increase rates as early as its August meeting.