Czech national bank cut its reporate by 25 bps to 2.25%
NBP cut its intervention rate by 25 bps to 5.25.
The Czech national bank rather surprisingly cut its repo rate
by 25 bps at its meeting today. Although we did not earlier
exclude the possibility of a rate cut in June, signals from
the bank suggested that the step would materialize rather in
July. The CNB usually decides on rates along with discussion of its inflation report and the bank did exclude its earlier release at the May meeting. It seems that the bank
started to surprise the market again.
Inflation allows for lower rates, but the need to cut rates
does not stem from the domestic economy but rather from
the economy of the eurozone. In addition, possible rate cut
in the EMU would widen the interest rate differential,
which might ignite appreciation of the koruna.
It seems that rates will be stable for several months now.
This cut might even be the last in this cycle, but this much
depends on the ECB decisions.
On the contrary, the 25 bps rate cut in Poland was hardly
surprising. The bank has cut rates each month this year, as a
result, the intervention rate currently stands at 5.25%. The
central bank is reflecting the low inflation as well as the
absence of demand driven inflationary pressures. Last
week, even the IMF suggested that Polish monetary policy
was too cautious. We may expect another rate cut in July.
Jakub Dvořák, Investment Research, CSOB