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 stay on hold in a close vote
November’s bank board meeting was a surprisingly calm event (as all board members raised their hands for a 25bp hike) despite hawkish comments from some members before the meeting who suggested they would vote for a 50bp hike. Also, the forecast released in November had an unexpectedly dovish message. As the economy developed almost exactly in line with the forecast, we believe the bank board will stay on hold, in line with the recent staff prognosis. Yet, some of board members might consider monetary conditions too loose due to the weaker koruna. We thus expect the board to be split, and our call for no hike is a close one.
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Unemployment breaks yet another record
The share of unemployed broke another record in November, when it dropped to its lowest level at 3.5%. The number of vacancies did not lag behind, surpassing October’s maximum. Therefore, finding a suitable work force is increasingly difficult for companies. However, given the negative seasonal factors, we expect the share of the unemployed will rise again from December.
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Inflation is beginning to slow down
The year-on-year inflation slowed down in November to 2.6% after its peak in October, when it reached the highest pace in the past five years. Despite that, consumer prices increased moderately on a mom basis. According to our forecast, the inflation pace will further decelerate in the following months.
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