MNI CNB Preview - Sep 2025: On Hold As Inflation Risks Abound

Download Full Report Here

Executive Summary

• Unanimous consensus call is for the CNB to keep interest rates unchanged.
• Services inflation, wage growth, property prices, and fiscal uncertainty are seen as key risks.
• Latest communications indicated a commitment to keeping rates at their current levels.

The Czech National Bank (CNB) is poised to leave the two-week repo rate unchanged at the near-neutral level of 3.50% for the third consecutive meeting as inflationary risks continue to linger. The unanimous consensus call for an on-hold decision is underpinned by latest communications from Czech central bankers, signalling the intention to stand pat on rates amid elevated services inflation, robust wage growth, overheating property market, and fiscal uncertainty. We align with consensus and expect no dissenting votes, with Governor Aleš Michl likely to deploy hawkish-leaning rhetoric and reaffirm determination to tackle existing price pressures. Hawkish risks lie in forward guidance, with market participants keen to learn if Governor Michl’s message on the outlook for interest rates becomes any more directional. While the Bank Board has not formally declared an end to its rate-cutting cycle, it repeatedly emphasised that current conditions are by no means conducive to a resumption of monetary easing.