Comment by Jaromír Šindel, Chief Economist of the CBA: Mortgage rates are significantly determined by the movement of market interest rates. However, structural factors in the banking market are also important. The CNB's investigation of credit conditions in our analysis helps to explain what factors influence the difference between mortgage and market interest rates deviating from its normal level. The CBA analysis shows that a combination of stronger demand and competition among banks plays a key role. It is the latter that can lead to more favourable rates for clients without undermining market stability. The difference between mortgage rates and market rates that we have been monitoring is therefore mainly dampened by stronger demand, but in an environment of growing competition, which is key. Banks' profitability also plays a role, acting as a corrective mechanism to maintain competitive interest rate spreads but also market stability.

Comment by Jaromír Šindel, Chief Economist of the CBA: The January slowdown in consumer price growth to 1.6% (mainly due to fiscal intervention in regulated energy prices) was accompanied by a discussion of a possible slight reduction in the CNB interest rate in order to fine-tune the recent interest rate cycle. However, persistently higher momentum in core inflation has left its interest rate unchanged, and risks associated with service prices and fiscal policy leave all options open for the central bank to move its interest rate. This is also true in light of the central bank's new forecast outlook, which admittedly encourages a marginal short-term interest rate cut before rising to 4% as early as the end of this year. With its decision and the reiteration of both inflationary and disinflationary risks, the central bank has tempered the dovish expectations of some market participants and the outlook for a 3.5% rate still seems likely. The key is the reiteration of the thesis of the sustainability of a return to the inflation target through softer core inflation.

Comment by Jaromír Šindel, Chief Economist of the CBA: The analysis summarizes the government's regulatory steps that will further slow consumer price growth this year, probably well below 2%. What does this mean for the CBA, which seems to be starting to deflate the pigeon balloons, at least more than at the end of last year? Given its earlier communications, where inflation is headed in 2027 should be key, which will also indicate the direction of core inflation in the months ahead. And it is not just the case of still strongly rising services prices that are the focus of this analysis, the first part of the triptych ahead of the CNB's February board meeting.