CNB to revise EUR/CZK floor

Recently, CNB has revised its inflation projection path lower through 2016, and while the CNB still forecasts inflation to reach the 2% target at the end of its forecast horizon, this does not seem like genuine conviction. 

Due to the EU fund inflow, one-off investment in aircrafts, and likely fall in growth rate to sub-3% over 2016-17, CNB has revised up its 2015 GDP growth forecast to 4.7%. 

Czeck National Bank (CNB) Governor, Miroslav Singer, said on Friday that the EUR-CZK floor of 27.00 is expected to be extended through to end-2016 or even early-2017. As of now, the guidance had been for the floor to be removed 'sometime after mid-2016', although most analysts, had anyway interpreted this to mean around the end of 2016 - in that sense, the change is not too significant, although it conveys CNB's lack of confidence that inflation will accelerate anytime soon, says Commerzbank.