Czech National Bank Shifts to Wait-and-See Mode, Koruna Weakens

The Czech National Bank (CNB) kept its policy rate at 3.75% and switched back to a wait-and-see stance after hiking it by 25 basis points in June, citing upside inflation risks.

Despite still highlighting elevated core inflation, robust nominal wage growth, and potential acceleration in money supply growth as risks, the CNB's tone was less urgent than before. Governor Ales Michl emphasized that the bank would focus on core inflation, not direct fuel-price volatility from the US-Iran conflict.

This shift in stance led to a slight weakening of the Koruna against the Euro, with Commerzbank expecting EUR/CZK to trade sideways near 24.20 in coming months.