Czech National Bank

March 27, 2014

The two-week Czech repo rate was last cut in November 2012.  That reduction was 20 basis points in size and left the Czech Republic with a virtual zero interest rate policy (the rate has been at 0.05% ever since).  To prevent tighter monetary conditions caused by deflation, an additional exchange rate monetary tool was introduced in November 2013, when central bank officials made a one-sided commitment to intervene as needed to prevent the koruna from strengthening past the 27 per euro level, but depreciation from that level will not be similarly resisted.  That commitment was reaffirmed in February and again in a statement released today.  This action was anticipated.  The next statement release date will be May 7.  In the year to February, Czech consumer prices rose 0.2%.  4Q13-over-4Q12 GDP growth was 0.9%.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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