Czech National Bank Policy Stays Same by Unanimous Vote

March 30, 2017

The CNB Board kept its 2-week repo rate at 0.05%, the level since November 2012, and voted to maintain its asymmetric exchange rate policy that since being imposed in November 2013 has utilized intervention when necessary to prevent the koruna from strengthening beyond 27 per euro. That hard commitment is slated to expire in three months at midyear.

A statement released today observes that Czech CPI inflation has moved up into the upper half of its target band sooner than anticipated and likely will exceed such for a while. Growth slowed in 4Q16 but has been solid in the first couple of months of 2017. In forward guidance, the statement concludes,

Sustainable fulfillment of the inflation target at the monetary policy horizon remains a condition for a return to the conventional monetary policy regime. The evolution of the koruna exchange rate, which may fluctuate in either direction in the short term, is still the main uncertainty for the period following the exit from the exchange rate commitment. The CNB will stand ready to use its instruments to mitigate potential excessive exchange rate fluctuations following the exit from the commitment.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission. 

 

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