Czech Republic: CNB mulled its rate rise decision – Rabobank

The Czech National Bank (CNB) increased its policy rate as its seen to be one the most hawkish central banks. Economists at Rabobank reviews the move unchained in the EUR/CZK pair by this decision.

Key quotes

“The CNB strengthened its reputation of the most hawkish central bank in the CEE region by raising its policy rate by 25bps to 2.25% on Thursday.”

“Governor Rusnok revealed that it was a ‘difficult’ decision. The announcement was postponed by an hour to allow for more deliberation that concluded in a split vote of 4-3 in favour of a 25bps move.”

“When the decision was announced, EUR/CZK plunged sharply and traded as low as 24.877 - the lowest since October 2012. However, EUR/CZK trimmed a large part of its intraday losses when it turned out to be a dovish hike.”