MNI CNB Preview - June 2025: Keeping Policy Restrictive

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Executive Summary:

• Recent communications indicated no rush to ease policy further.
• Persistent price pressures in certain sectors warrant caution.
• Global geopolitical developments have increased uncertainty.

Unanimous consensus is for the Czech National Bank (CNB) to leave the two-week repo rate unchanged this week as persistent inflationary pressure in the services sector calls for caution, while tensions in the Middle East raise the risks of turbulence in commodity markets. Against this backdrop, with the key interest rate (3.50%) nearing the neutral zone, the Bank Board is set to postpone potential further fine-tuning at least until later this year. Recent communications from Board members reinforced these expectations as several officials expressed their preference for near-term interest-rate stability.