MNI CNB Review - Mar 2025: Cautious Pause

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Executive Summary:

• The Bank Board took a unanimous decision to stand pat on rates.
• The balance of inflation risks was assessed to the upside.
• The Governor kept all options open for future meetings.

The Bank Board delivered the anticipated on-hold rate decision in a unanimous vote, citing a slew of familiar arguments to explain its reasoning. Robust services price growth and rising global uncertainties were at the top of the list of concerns, even as inflation was projected to stay just above the +2.0% Y/Y point-target this year and return to the target in 2026. Cautious rhetoric accompanying the decision sharpened a little, indicating the Bank Board’s cautious approach during this final phase of its monetary easing cycle. Although Governor Michl was non-committal as to the future direction of interest rates, there may still be some room left to loosen monetary conditions before terminating the cycle.