CNB will keep raising rates to quell Czech inflation
Subject Central Europe’s monetary hawks and doves. Significance The Czech National Bank (CNB) has raised its benchmark two-week repo rate five times since February. That is more times than the US Federal Reserve (Fed) and has brought Czech rates above Poland’s. The CNB is likely to remain Central Europe’s most hawkish central bank in 2019, despite increasing pressure on its regional peers, the National Bank of Hungary (MNB) in particular, to begin tightening policy as inflation rates pick up. Impacts Investor sentiment towards emerging markets is improving, with developing economy stocks rising more than 2% in November. Emerging market currencies, including the ailing Turkish lira, are rising against the dollar. Weakening demand and mounting concerns about oversupply will affect oil prices, which have been falling sharply since early October. Bond traders are becoming increasingly sceptical that the Fed will hike rates three times in 2019.