Two-Week Czech Repo Rate of 1.0% Retained

February 4, 2010

The Czech National Bank as expected and by a unanimous 6-0 vote made no changes in monetary policy today.  A statement from monetary officials projects headline and policy-relevant consumer price inflation near its 2% target during the coming 1-2 years.  After dropping 4.3% last year, real GDP is expected to advance 1.5% this year and 1.9% in 2011. Short-term interest rates should be steady in the first half of 2010 but then begin to climb gradually.  Risk factors are balanced.  From a peak of 3.75%, the central bank implemented rate cuts of 25 bps in August 2008, 75% in November, 50 bps in December, another 50 bps in February 2009 and three more reductions of 25 bps each in May, August, and December, the last of which carried three of seven dissenting votes.

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.

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