The Czech National Bank unexpectedly cut interest rates by 50bp at today’s meeting, with all seven board members voting in favour of the cut. We expect the key rate to remain unchanged for the rest of the year. However, the door remains open to other instruments. The governor admitted that the central bank is ready to react to any excessive fluctuations in the koruna. Although the CNB currently perceives no shortage of liquidity in the banking system, the board also, as a preventive measure, softened the rules of governing liquidity-providing operations.

The CNB delivered a 50bp emergency rate cut today. This makes the already under pressure CZK more vulnerable as the its key anchor (the yield advantage) is now being taken away. CNB FX interventions are now a question of when rather than if. Should CZK see another abrupt move lower, we expect the CNB to step in around the 28.00 level (the first pain threshold level, in our view). This could happen this week. Yet this will not be a firm ceiling on EUR/CZK, with intervention having a smoothing rather than firming function. This means the EUR/CZK could trade meaningfully above 28.00 should global risk assets remain under pressure.

On Wednesday, March 4, 2020, the article on the recently discussed subject of coronavirus, written by Petr Bříza, was published on the epravo.cz webpage.

The development of the 2019 Novel Coronavirus (COVID-19) outbreak continues to create contractual and other legal challenges which are in many ways unprecedented. Whilst the outbreak originated in China, its impact is being felt globally, and in response, we have co-ordinated across our own global offices to ensure that we centralise our know-how and are sharing best practice with our clients. This page contains some of our legal briefings created to date.