The Czech MPC was even more dovish than we had expected at this afternoon’s post-meeting press conference as it not only extended its commitment to keeping the exchange rate ceiling in place to 2017 (as we had suggested might happen), but it also acknowledged that it had discussed introducing negative interest rates. If we’re right that the Czech economy will continue to perform strongly this year, we think a loosening of monetary conditions is unlikely. However, it’s clear that policymakers are increasingly concerned about the weak inflation outlook and the impact of looser policy in the euro-zone.
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