The CNB hikes rates by 0.25% – our viewpoint

By | 2018-11-01T14:11:37+00:00 1st November 2018|

The Czech National Bank continued to react to persistently firm inflation readings by hiking interest rates today for the 7th time since August 2017, by 25bps to 1.75%.

We see the likelihood of further interest rate rises until “positive real interest rates”, or rates higher than the annual consumer price inflation level (currently 2.3%), are achieved. Hikes look likely particularly in the environment of recent koruna weakness versus the Euro (and dollar), which is pushing imported inflation up. We remain positioned in short-duration assets in client portfolios and our EnCor FIS Fund.