The tighter monetary conditions also reflected the outlook for a stronger koruna near 24 against the euro at both the one- and two-year horizons. The stronger koruna in the forecast reflects a combination of the improved performance of the Czech economy, the current level of the koruna and a weaker US dollar. The outlook for the interest rate differential remains essentially unchanged, as the more hawkish outlook on the CNB has been offset by a less dovish outlook on the ECB as well, where we expect its deposit rate to remain at 2%.
Source of primary data
CNB, CBA
Note
"Actual" and "CBA forecast" represent the full-year average and "actual ytd" is the average for the year to date. \The dashed lines in the 'middle 25-75% forecast range' represent the middle half between the 25th and 75th percentile of all forecasts in the CBA consensus.