PRAGUE – The Czech National Bank is expected to deliver another hefty rate hike on Nov. 4 and keep tightening at this year’s last policy meeting in December, a Reuters poll showed on Monday.
The central bank shocked the market in September with a 75- basis-point hike, its biggest since 1997, a move to anchor inflationary expectations spurred by rapid price growth.
Seven analysts in the poll predicted the key two-week repo rate would rise by 50 basis points to 2.00% on Thursday, while the other five saw a 75-basis-point hike, which would bring the main rate to the pre-COVID level of 2.25%.
Vice-Governor Tomas Nidetzky has told Reuters that he expected the board to debate these two options on Thursday, while board member Tomas Holub was quoted as saying that another bigger-than-standard rise was needed.
Five analysts forecast the main rate to end 2021 at 2.25%, three saw it at 2.75% and one at 2.50%.
Policymakers around central Europe have turned to rate hikes to battle rapidly rising inflation fed by global supply snags and rising energy costs, as well as by rebounding consumer demand and tight labour markets pushing up wages.
In September, the Czech consumer price index (CPI) jumped to a fresh 13-year high of 4.9% in annual terms, more than double the central bank’s target of 2%, and far beyond its one-percentage point tolerance band.
The central bank’s board will have the quarterly update to the staff macroeconomic forecast available when all seven members convene on Thursday.
After their decision, which will be released on 2:30 p.m. (1330 GMT), Governor Jiri Rusnok is due to comment at a press conference at 3:45 p.m. (1445 GMT), where he will also present the economic outlook.
(Reporting by Mirka Krufova, Writing by Robert Muller, editing by Mark Heinrich)
