Economic policy / Macroeconomic Indicators, Economic Growth
This section reports on economic policy initiatives of the Czech government, the EU, and other entities that have a direct impact on the competitiveness of the country. It also includes information on economic priorities of the AmCham and other leading associations.
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Spotlight issue
CNB to sound dovish amid weaker inflation readings
The CNB forecast released in early January met with disappointment in the markets which expected the swift normalisation of monetary policy to continue. CNB expects only one hike at the very end of the year with CZK set to appreciate rapidly as early as the second quarter. We do not expect a rate hike to be announced at Thursday’s meeting. The risks to the forecast are likely to be assessed as balanced or even slightly negative, as the figures from the real economy slightly disappointed and current inflation eased more than expected. Only CZK refuses to appreciate and thus represents a pro-inflationary risk. We expect inflation to recover on the back of strong economic conditions and CNB to hike twice in the second half of the year.
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Economic dynamics did not slow at the beginning of the year
Today’s statistical reports surprise on the upside. Industrial production maintains strong dynamics; retail sales even accelerated, and construction statistics are booming. The figures show that the domestic economy began the new year on a high note. So far, the monthly statistics corroborate our view of strong GDP growth of 3.8% this year, Komerční banka says..
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