Czechs see delayed exit from FX commitment

The Czech National Bank made this statement following its most recent monetary policy meeting:

A need to maintain significantly expansionary monetary conditions persists. The likelihood that it will be necessary to discontinue the exchange rate commitment earlier than assumed in the forecast is decreasing over time. In this situation, the Bank Board discussed extending the duration of the exchange rate commitment. It agreed that its discontinuation would probably shift to around the end of 2016.

Translation to plain language:

We will likely be keeping the crown's exchange rate on the weaker side of the 27-per-euro level until the end of 2016, several months longer than we had previously been saying, but we are not ready to commit to that delayed exit yet.

Bottom line: Expect the Czech central bank to abandon its pledge to prevent the crown from appreciating beyond the 27-per-euro level no earlier than in late 2016 or even in early 2017 (note the wording "around the end of 2016"). A cautionary note: The statement seems to deliberately leave the door open for policymakers to remove the exchange rate floor earlier in the second half of 2016 in case of an upside inflation surprise which would require immediate policy tightening.