Czech central bank markedly raises inflation outlook, slowly to return to target by end-q2 2018 _ _ central european financial observer


The CNB has significantly raised its inflation outlook for 2017-2018, according to a summary of the new inflation report and a table with basic macroeconomic indicators forecast released today. Silver price chart 5 year According to the forecast, both headline and monetary policy-relevant inflation will speed up from the 1.4-1.3% y/y growth in Q4’2016 to 2.1% y/y already in Q1’2017 (the monthly headline inflation is seen at 1.9% y/y in January, 2.1% y/y in February and 2.3% y/y in March), surpassing the 2% CNB’s target (but remaining below the 3% upper bound of the tolerance band around the target) and accelerate further to a peak of 2.7% y/y in Q3 this year and then gradually subside to return to the target from above in the monetary policy horizon, i.e. Usd to ringgit malaysia around the end of Q2’2018. British pound exchange rate history The inflation acceleration is seen to be driven by strongly growing domestic costs in the entire forecast horizon to reflect rising wages and price of capital amid robust economic activity. Stock market definitions glossary This along with the renewed increase in industrial producers’ prices in the euro area will result into further increase of adjusted inflation excluding fuels. Futures and options trading meaning At the same time, the expected crown’s firming as of mid-2017 onwards may mitigate the abovementioned influences. Conversion rate aud to usd Food and fuel prices are to see temporary strong increase with that for fuels to reflect the annual increase in global oil prices. 1 nzd to usd The CNB sees administered prices to increase only slightly this year, but more pronouncedly in 2018. Dollar and rupee exchange rate The forecast assumes that sustainable fulfilment of the 2% inflation target, which is a condition for abandoning the fx cap and returning to conventional monetary policy, will be achieved as of around mid-2017 onwards. Secret messages in logos Consistent with the forecast is an increase in market interest rates in H2 2017 followed by a further modest rise in 2018. Rub usd Exiting the fx cap would not result in strong crown’s firming to levels before the fx interventions started in November 2013 as meanwhile the weaker crown’s exchange rate has been passed through to the price level and other nominal variables, the CNB said. Usd to chf exchange rate According to the forecast, the crown is seen to appreciate in H2’2017 and continue slightly firm also in 2018. Gender articles Still, the central bank noted that the forecast does not take into account that the crown’s firming may be dampened by exchange rate risk hedging by exporters before the fx cap end, by the closing of crown’s positions by financial investors and by possible CNB interventions to mitigate exchange rate volatility after the exit.

The CNB has lowered its 2016 GDP growth estimate to 2.4% from 2.8% previously expected as economic growth in Q3 appeared below the previous CNB’s expectations because of much lower-than-expected contribution of net exports. Currency converter usd to aed The economy is to expand by 2.8% in both 2017-2018, downwards revised by only 0.1pp. Usd to aud rate The GDP growth acceleration this and next year will reflect the renewed expansion of fixed investments, in particular, government investments co-financed from EU funds, while household consumption growth to remain robust. Futures market news The stronger economic expansion will be also driven by an acceleration of the exports growth. Convert to binary code Following the discontinuation of the CNB’s fx commitment around mid-2017 the monetary conditions will start shifting towards neutrality (after being easy in H1). Usd to inr forecast 2015 The strong economic expansion will also manifest itself in the labor market, i.e. Us stock futures cnn money in further and stronger wage hikes, but only slight unemployment decrease, possibly to reflect the fact that the unemployed people lack the necessary skills and qualification to fill the vacant posts.

On the fiscal side, the CNB estimates that last year the general government budget reported a surplus of 0.1% of GDP, which is more downbeat than the estimate of the finance ministry for a surplus of 0.5% of GDP. 1 rmb to usd The central bank projects the fiscal surplus to reach 0.4% of GDP this year and double to 0.8% of GDP in 2018.