Czech National Bank (CNB) Governor Jiří Rusnok has dampened markets' expectations of rate hikes. However, economists at ING expect hawkish statements and fresh support for the koruna again in the coming weeks.

The Governor's words do not change the CNB hawkish mood

“Yesterday's Czech National Bank (CNB) interview with Governor Jiří Rusnok, who mentioned that he hopes the May rate hike will be the last, caused a drop in market expectations, especially in the 1-2y horizon. However, we believe the Governor's words do not alter the hawkish tone we saw at the March meeting.”

“We can't expect many hawkish triggers in the coming days and market rates may remain at lower levels for several days. However, from the second half of next week or rather from the beginning of the following week, when the board will have a draft of the new CNB forecast in hand, we expect hawkish statements and fresh support for the koruna again.”

“The koruna is on a bumpy road, but we think it should stay within the 24.30-24.50 range of recent weeks.”