Central Europe

Research evidence excerpt

Jose Cerveira (44-20) 7742-3556

J.P. Morgan Securities plc

Nicolaie Alexandru-Chidesciuc (44 20) 7742-2466

J.P. Morgan Securities plc

Europe Economic Research

JPMORGAN

07 August 2026

Central Europe

Czech inflation confirms sticky underlying inflation

pressures

The CNB kept rates unchanged as expected, but rates

likely to rise this year

Hungarian inflation tumbles to 10-year lows, facilitating further NBH cuts

CEE industrial output powers ahead

The latest round of inflation releases continues to paint a picture of sticky underlying price pressures, with core CPI metrics running at around 3%, but with headline inflation generally below that level due to benign food price dynamics. The

contrast between resilient services inflation and negative tradable goods inflation remains intact and, if anything, is becoming more pronounced. Central bank stances, however, continue to differ, reflecting in part different starting points.

The increase was broad-based, with our preferred proxy for

core CPI accelerating to 3.2%oya, suggesting CNB core likely rose to around 2.9%oya from 2.8%. Services inflation also

re-accelerated to 4.7%oya from 4.5%, adding to evidence that

underlying inflation remains sticky and continues to test the

CNB’s comfort zone.

Despite this backdrop, the CNB left rates unchanged at 3.75%

the following day, with the decision receiving unanimous

support from all seven Board members. The statement

retained a hawkish bias, highlighting persistent core inflation,

wage growth, credit expansion and property market developments as upside risks, but policymakers argued that the June

rate hike had delivered the desired degree of tightening. Governor Michl reiterated that all options remain on the table, but

stressed that the current degree of monetary restriction is, for

now, sufficient to keep inflation under control, suggesting little urgency to tighten again in the near term.

Figure 2: CNB interest rate corridor

The CNB has already delivered one rate hike and continues to

debate whether and when to follow up with a second,

although there appears to be little urgency. The NBP shares a

similar policy rate (3.75%) but lacks the hawkish inclination

…