Central European Daily

After a year of discussions, the Czech National Bank has finally decided to join ongoing currency wars. Yesterday, the Bank Board surprisingly announced to begin to target the EUR/CZK exchange rate (close) to the 27.0 level. The trigger to activate interventions come from a new forecast envisaging an inflation fall next year, with monetary relevant inflation even to be negative. Through the weak koruna, i.e., increased import prices, the CNB thus wishes to stir up inflation, while also targeting ‘consumption postponed for speculative reasons’.