Standard Chartered’s Saabir Salad has revised the outlook for the Czech National Bank (CNB), now anticipating two additional 25 basis point rate hikes in November 2026 and Q1-2027, following a pre-emptive 25bps hike in June. This would bring the total cumulative tightening to 75bps and raise the policy rate ceiling to 4.25% by the end of Q1-2027 [1]. The bank has also increased its 2027 CPI inflation forecast from 2.0% to 2.6%, citing persistent risks from the Middle East as a key factor [1].
Standard Chartered notes that market participants are currently more hawkish than their own projections, with markets pricing in over 100bps of tightening over the next 12 months. The report suggests that the CNB may allow some of this hawkish market pricing to persist, potentially reducing the need to deliver all the tightening currently anticipated by markets. The risks to this outlook are described as balanced [1].
Domestically, core inflation remains elevated at around 3%, which is at the upper bound of the CNB’s target range and is a key metric for policymakers. Externally, the inflation outlook is closely tied to developments in the Middle East, especially regarding energy prices. Additionally, the future path of CNB policy will be influenced by the rate decisions of major central banks such as the Federal Reserve and the European Central Bank. A more hawkish stance from these institutions could prompt further tightening by the CNB, while a dovish shift could allow the CNB to pause after a potential November hike [1].
CONCLUSION
Standard Chartered’s revised forecast signals a more cautious approach by the CNB in response to persistent inflation risks, with the possibility of further rate hikes if external pressures intensify. Market expectations remain more aggressive than the bank’s outlook, highlighting uncertainty around the future policy path.