Czech Koruna: Polish CPI surprise complicates CNB path – Commerzbank

Commerzbank’s Tatha Ghose highlights that a downside surprise in Poland’s May flash Consumer Price Index (CPI) contrasts with earlier Czech inflation acceleration that had pointed to Czech National Bank (CNB) tightening on 18 June. Softer Polish food and energy prices may foreshadow similar moderation in Czech data. This interplay makes the upcoming CNB decision more finely balanced as regional inflation dynamics shift.

Polish CPI twist for Czech policy

"On Friday, we wrote about the clear acceleration of Czech CPI and PPI in April, which puts pressure on the Czech National Bank (CNB) to hike rates at their 18 June meeting."

"Since then, however, Poland’s flash CPI report for May landed as a clear downside surprise. This will cool off any lingering discussion about near-term tightening by the Polish central bank (NBP) at least."

"We can see that the broader trends have been correlated across countries, which increases the likelihood that the Czech Republic could witness something similar in May."

"Poland had also experienced similar inflation acceleration in recent months, but this reversed in May as the oil and commodity prices began to come off the boil."

"Hence, chances are that the Czech Republic could witness a similar moderation in May, although this is not guaranteed."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)