By Jason Hovet
PRAGUE (Reuters) - The Czech National Bank (CNB) is likely to maintain policy stability and keep its key interest rate at a more than two-decade high of 7.00% on Wednesday, a Reuters poll showed, with expectations still leaning toward a cut in the third quarter.
All 12 analysts in the poll published on Friday forecast no change to the base rate at the May 3 policy meeting.
Markets have turned to expectations of rate cuts this year with the economy weakened by strong price growth that has hammered consumers, but most policymakers have said no loosening until inflation falls securely into single digits.
The bank has said debate at the next meeting is between stability and a rate hike, with risks still present from a pick-up in wage growth and the state's high budget deficit.
"In our view, a hike is unlikely," ING said in a note. "We think the CNB will only start the debate about a possible normalisation of monetary policy when inflation moderates close to the current levels of the policy rate."
Rates remain elevated, but on hold, around central Europe. Hungary this week cut the top of its interest rate corridor, paving the way for rate cuts later.
The Reuters poll produced a median forecast for the key Czech rate to stand at 6.75% at the end of the third quarter and at 6.00% at the end of the year, both unchanged from March polling.
Among the eight analysts who provided a forecast of the next move, four said they expected a cut in September, one said in the third quarter.
Central bank Vice-Governor Eva Zamrazilova told Reuters this week that the bank would not ease policy prematurely.
The crown has been trading around 15-year highs against the euro so far in 2023, helping the bank tame inflation, which slowed to 15.0% in March.
The central bank forecasts inflation's return to single digits in the second half of this year.
Signs of a pickup in nominal wage growth, though, have been a concern, especially with the unemployment rate the lowest in the European Union.
High inflation crushed real wages last year, and the loss of purchasing power has been a key factor in the economy showing two consecutive quarterly drops to end-2022. Activity remains sluggish so far this year as well.