Investors were more active
compared to previous days. Benign US
inflation released in the afternoon pushed
bonds higher worldwide, Czech yields lost
some 4 bps aftermath. Interview of CNB
Board member Jan Frait had no impact on
the market. He said that the inflation risks
were balanced. He added that another rate
cut would have require strong reasoning.
However, he still saw a room for further rate
cut. Hence he didn’t said anything new. His
words confirmed our scenario, that the
probability of a rate cut is higher than
probability of a rate hike. Nevertheless, we
expect further cut only if the koruna
approaches the EUR/CZK 29.00 level or
inflation drops below 1 %.
Today the market might be calm, the bonds
may lost some of yesterday’s gains. No
event is scheduled.
(CSOB - Investment research)