CNB Minutes: Domestic and external factors at odds
Czech policymakers still view domestic factors as inflationary, while the foreign environment poses risks to future economic activity. Tight labour and housing markets are seen as the main concerns. Indeed, imputed rents remain a key driver of core inflation. We therefore use scenario analysis to gain a better understanding of the matter Wait and see ...
Czech policymakers are currently maintaining a wait-and-see approach regarding monetary policy, with domestic factors such as tight labor and housing markets being viewed as the primary concerns. While foreign factors also pose risks to future economic activity, imputed rents remain a key driver of core inflation. At the August meeting, the Bank of the Czech Republic (CNB) decided to keep interest rates unchanged at 3.75%.
The Bank Board assessed the current monetary policy setting as appropriate, given that the June interest rate increase provided additional tightening. The Bank Board expects inflation to remain in the upper part of the tolerance band for most of the forecast horizon, with broadly stable interest rates forming the baseline scenario.
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