They opened slightly weaker, but they erased some losses during the day. The activity was minimal. The market got ready for tomorrow’s new 10-year benchmark tender. The Finance Ministry will sell bond worth CZK 13 bn. The amount is higher than in tender in Q1, but there will be likely enough investors bids, as institutional investors need new benchmark into their books. Michaela Erbenova, CNB Board member, said that the central bank need not cut rates further even if a firm koruna tames inflation more than it forecasts about two month ago. He added that the CNB could tolerate lower inflation in exchange for macroeconomic stability and stability of interest rates, which can itself be a value. Erbenova belongs to hawks among other members, so it doesn’t mean that the rate cut cycle is at the end. Nevertheless, we agree with her arguments. Thus we see chance that the bank will not cut rates on its April meeting. Today the market might be quiet, traders will waits for tomorrow’s tender.
(CSOB - Investment research)