Consumer prices grew by 0.6% in February due to the absence of another energy price shock. Still, price pressures remain robust with elevated price growth in services. We have revised our inflation outlook upward and expect now a slower-paced rate-cutting cycle. |
Inflation increased by 6.0% compared to December 2022, roughly in line with median market forecast. From a year-on-year perspective, inflation increased from 15.8% to 17.5%. However, when ignoring government measures affecting energy prices, inflation fell from 19.3% to 18.1%. |
The persistence of inflation amidst recession risks will continue to play a crucial role in CE/SEE monetary policy (MP). In the dilemma between combating inflation and not harming the economy too much, central banks (CBs) should maintain their data-driven approaches this year. Nevertheless, 2023 will test the (inflation-fighting) credibility of CBs in Emerging Europe, especially when it comes to possible rate cuts, especially in CE, as early as this year. At least current market pricing seems to be comfortable with current MP stances. |
In Decemeber, inflation decreased to 15.8% vs. expected 16.2% in line with latest downside surprises in many European economies. However, in January, a renewed increase of the inflation rate is likely due to traditional repricing coupled with reshuffling in fiscal measures. |
The CNB bank board decided to keep interest rates stable for the sixth month in a row. The Bank Board also decided that the CNB will continue to prevent excessive fluctuations of the koruna exchange rate. Next meeting will be about stability or an increase. |