CNB Review: One Move, Open Risks

Research evidence excerpt

CNB Review: One Move, Open Risks

Update

June 18, 2026 04:10 PM GMT

Morgan Stanley & Co. International plc+MCzech Republic Economics and Macro Strategy Georgi Deyanov

| Europe Economist

Georgi.Deyanov@morganstanley.com +44 20 7425-7006

Arnav Gupta

StrategistCNB Review: One Move, Open Arnav.Gupta@morganstanley.com +44 20 7677-0382

James K Lord

StrategistRisks James.Lord@morganstanley.com +44 20 7677-3254

The CNB raised its key policy rate by 25bp to 3.75%, somewhat Exhibit 1 : We expect the CNB to remain on

earlier than we expected. The statement pointed at extra caution hold until mid-2027, when we see a couple of

for additional action. We continue to expect no additional 25bp rate cuts

tightening this year, but see risks skewed to the upside. We stay 8 % % 8

7 7

neutral on Czech rates and FX. 6 6

5 5

4 4

Economics | Elevated wage and lending growth lead to a 25bp risk-management 3 3

rate hike: In a 6-1 decision, the CNB raised its key policy rate by 25bp to 3.75%, a 21 21

quarter earlier than we expected. This is in line with consensus and our risk scenario. 0 0

'24 '25 '26 '27

The statement noted that updated staff forecasts (not published) show risks of Tolerance Band 2-week Repo Rate

Headline, %Y Core, %Y

inflation temporarily increasing slightly in late 2026 and early 2027. Moreover, the Fin. Market Infl. Expect. (12-month)

CNB highlighted that core inflation has remained close to the 3%Y upper bound of Source:line and HaverunfilledAnalytics,bars representMorganMorganStanleyStanleyResearchforecasts.forecasts. Note: Dashed

the tolerance band for six months, without showing any easing tendency. Hence, the

CNB decision aims to ensure sufficiently tight monetary policy to lower core Exhibit 5 : Our semantic index read the June

inflation.