MNI CNB Preview - May 2026: Using Inflation Buffer

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Executive Summary:

• The CNB is widely expected to leave interest rates on hold.
• New forecasts should undergo hawkish revisions; the details will be in focus.
• The Governor will likely leave all options open for future meetings.

There is little doubt that the Czech National Bank (CNB) will leave interest rates unchanged this week, likely in a unanimous decision, taking advantage of the ‘inflation buffer’ built earlier this year to better assess the implications of the conflict in the Middle East. Policymakers have been vocal about their preference for looking through the initial impact of the war and focusing on potential second-round effects instead. We expect the CNB to keep the two-week repo rate unchanged at 3.5% in the coming months, but the highly uncertain outlook will likely encourage the Governor to repeat that all options are on the table.