As expected, the central bank raised its key repo rate from 0.50% to 0.75% at its August meeting. Although the bank board discussed a 50bp hike, as proposed by the new CNB forecast, in the end it preferred a gradual normalisation of monetary policy. According to Governor Rusnok, the CNB should continue to pursue gradual normalisation for the rest of the year. While the CNB forecast calls for a repo rate of 1.50% at year-end, we expect 1.25% due to the cautious approach of central bankers. However, we already expect a repo rate of 2.25% for end-2022, while the CNB expects 2%. The difference is mainly our expectation of a stronger economic recovery, with a slightly weaker koruna.