ING expects inflation in the Czech Republic to slow in 2026 as food price growth cools. Headline inflation is forecast to fall to around 1% in the summer. Core inflation is expected to ease in the second half of the year. Core inflation is estimated at 3% year on year at the start of the year. Imputed rents rose 5.1% year on year in January, helped by higher prices for new homes.

Inflation Split In January Data

January’s numbers show a clear split. Goods prices fell 0.4% year on year. Services prices rose 4.7% year on year. Sticky services inflation is one reason the Czech National Bank (CNB) may avoid easier policy, even if headline inflation stays below target. Markets see about a 55% chance of one rate cut between May and August, and a 45% chance of no change. If the CNB does not cut, the base rate could stay at 3.5%. A cut in May is possible if forecasts for weaker core and services inflation come true. If policymakers want more confirmation, the June or July inflation reports may shape the decision. July data should be available in early August. The January 2026 data underline this split. Headline inflation is low at 1.8%, but core inflation remains high at 2.9%. With services prices rising 4.7% year on year, the CNB is staying cautious.

Market Pricing And Policy Timing

This is similar to late 2025, when the CNB paused its easing cycle because of concerns about wage growth and services inflation. At the early February meeting, the board kept the same message: there is no rush to act, even with weak GDP growth of 0.3% in Q4 2025. The bank is focusing on inflation rather than boosting the economy. For derivatives traders, timing matters. A 55% chance of a cut is close to a coin flip. This means koruna options, especially around the May and June meetings, may need to price in higher uncertainty. The main point is that the CNB does not feel forced to cut, even as the ECB looks more dovish. That can support the koruna because it still offers a yield advantage. We think forward rate agreements may be pricing in too much easing, which could create trades that expect rates to stay at 3.5% through the summer. Create your live VT Markets account and start trading now.

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