The first monetary policy meeting of the Czech National Bank since the outbreak of the Ukrainian conflict will take place today. According to economists at ING, the CNB should hike by 75bp. However, a dovish press conference could make the CZK vulnerable. 

CZK vulnerable to any dovish CNB outcome

“A rate hike in the 50-100bp range is likely to be on the table today. Our main scenario calls for a 75bp hike in line with market expectations. Surveys prefer a 50bp hike.”

“Despite the hawkish decision, we can expect a dovish press conference highlighting stagflation and geopolitical risks. We expect that Governor Rusnok will mention that this rate hike may be the last, which we believe may lead to market disappointment.” 

“EUR/CZK has moved to the lowest levels in a month on optimism over a de-escalation in the Ukraine war, making the pair vulnerable to any dovish CNB outcome.”