Ending speculation on the Czech forex cap: quo vadis, CNB?

The Czech National Bank (CNB) is currently saying it will probably abandon its exchange rate commitment (defined as "close to" 27 koruna to the euro) sometime around mid-2017. However, close observers have justified concerns that it will do so sooner – or much later – than this.

The whole exchange rate commitment is based on a very simple principle. First you shift the exchange rate by, say, 5%. Then you keep it there until domestic inflation gradually accumulates a differen