Following a recent hawkish shift in its communication, the CNB delivered the promised interest rate hike at yesterday’s meeting. The key repo rate rose by 25bp to 3.75%. This was likely due to the bank board’s concerns over the future path of inflation, especially its core component. We expect CNB interest rates to remain on hold for the rest of this year and throughout next year, as we view yesterday’s hike primarily as a precautionary measure. However, in terms of the possible next rate movement, we still regard a hike as more likely than a cut. The reason for this is the robust domestic economy, rapid wage growth and fiscal policy, which is set to be more expansionary in the coming months.