As expected, the Czech National Bank left interest rates unchanged at its May meeting. Governor Michl emphasised the favourable position that enables the CNB to maintain its wait-and-see policy, assessing incoming data and the risks arising from the conflict in the Middle East. In its new forecast, CNB staff increased the inflation estimate for both this year and next, while lowering the outlook for GDP growth. Furthermore, the CNB board changed its assessment of the balance of risks to achieving the inflation target from neutral to inflationary. According to Governor Michl, a rate hike was not on the agenda at the May meeting, but cannot be ruled out in the coming months. We forecast CNB rates to remain on hold this year and next, but we see the risks tilted towards a hike.