Czech National Bank

February 6, 2013

Bank officials decided unanimously to leave the CNB’s two-week repo rate at 0.05%, the level to which it was cut by 20 basis points in early November.  That move followed 25-bp reductions last September and June and cumulative cuts of 150 bps in 2008, 125 bps in 2009, and 25 bps in 2010.  The backdrop for this virtual zero interest rate stance is that the Czech Republic is likely to experience a contraction of GDP this year as is did in 2012.  A statement from officials projects a drop in GDP of 0.3% after one of 1.0% last year and asserts that monetary policy-relevant inflation is expected to stay in the lower half of its 1-3% target for the entire forecasting horizon.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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