The Case Against Another Hike

CZECHIA - In Brief 13 Nov 2026 by Artur Radziwill

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By Artur Radziwill and Jan HagemejerThis note follows our in-briefs of the past fortnight and the discussion at the webinar, and is written after reviewing the minutes of the 5 November meeting and the autumn Monetary Policy Report, both published today. Its purpose is to set out at more length why we do not expect the Czech National Bank to raise rates again in 2027, and specifically not in the first quarter, when inflation will be at its highest. The case rests on what the October component data show about where the inflation ahead will come from, and on the Bank’s own account of how it sets policy. October print and November hike Czech consumer prices rose 2.4 percent in the year to October. On the Bank’s own decomposition, core contributed 1.75 of those 2.4 points and fuels 1.17, while food, drink and tobacco subtracted 0.44 and regulated prices 0.12. Core — the 56 percent of the basket left after regulated prices, food and fuel, net of indirect taxes — is running at 3.1 percent, and close to a third of that is imputed rent, the modelled cost of owner-occupied housing, at 4.6 percent and falling. The market-priced remainder is at 2.7. Headline sits near target because two large blocks are negative and a price cap is holding fuel down, not because domestic price pressure has faded. What worried the majority on 5 November was the next step: that the energy shock now sitting in fuel and administered prices will pass into core. The Board agreed that rates might need to rise modestly “to limit the second-round effects of the energy shock”, and the two members who pressed hardest for the move framed it as pre-emptive — Seidler called it a proactive response to second-rou...