Rate Hikes On The Horizon

We hold to our view that the Czech National Bank (CNB) will begin to unwind the 300 basis points of interest rate cuts implemented in response to the global downturn around the middle of 2011. Indeed, with consumer price inflation hitting an 18-month high in September, and the Czech economy well on the road the recovery, we forecast that the CNB will raise its 2-week repo rate from the prevailing 0.75% to 1.25% by end-2011.

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