Although the market reaction was quite harsh, today we see two main signs of moderation. Governor Michl confirmed the preparation of the rate reduction strategy and for the first time in a long time did not combat “excessive market expectations that may not materialize.” Therefore, our forecast remains unchanged: the first rate cut in November.
The CNB’s new economic forecasts will be released in November and are expected to show lower GDP growth both domestically and abroad and lower inflation compared to the August forecast. This should be enough for a rate cut. And on top of that, we see downside risks to inflation in the coming months in food and energy prices, which to some extent are appreciating sooner than expected.