Czech Koruna: CNB hawkish bias supports CZK – Commerzbank

Commerzbank’s Tatha Ghose notes Czech headline inflation fell to 1.5% year-on-year, below Czech National Bank (CNB) forecasts, with goods and energy prices soft but services still elevated. CNB officials stress core inflation remains high and view the latest print as transitory, keeping a hawkish bias. Markets may still price one more 25bp hike in 2026, with Czech Koruna (CZK) expected to outperform Polish Zloty (PLN) in coming months.

Soft CPI unlikely to derail CNB stance

"June’s Czech CPI flash release showed headline inflation easing to 1.5%y/y from 2.1%y/y, clearly softer than both market expectations (1.8%y/y) and the Czech National Bank’s (CNB’s) own forecast (2.1%y/y). The price level fell by 0.3%m/m on raw basis."

"The seasonally‑adjusted and smoothed month‑on‑month rate of change is now near‑zero, as prices continue to reverse from the earlier Iran war energy spike. Goods prices were weaker than before – softer by 0.4pps – with fuel and food prices particularly soft. Service prices remained stubborn, still faster than target at 4.5%y/y, which implies that underlying core dynamics will take time to calm down."

"CNB board member Jakub Seidler stressed in his X post that softer headline inflation was driven by volatile components, while core price growth remains in the upper end of CNB’s 2%±1pp comfort band. He underlined that CNB’s goal is long‑term price stability, and core inflation has not yet converged – in his view, this latest print is transitory."

"On this reading, the June CPI surprise does not materially alter monetary policy stance or language. We hold that core inflation will decisively decelerate in coming quarters. But, this view will not be the basis for CNB’s official guidance, hence the market view could linger around possible one more 25bp rate hike later in 2026. On this market view, the koruna will likely outperform the zloty in coming months."