Czech National Bank Raises its Interest Rates a Third Time

February 1, 2018

Following earlier increases of 20 basis points last August and 25 bps in November, the Czech two-week repo rate has been increased another 25 basisĀ  points to 0.75%. The Lombard rate becomes 1.50% versus 0.25% prior to last August, while the 0.05% discount rate hasn’t changed all this time. A released statement anticipates some further appreciation of the koruna toward 24.5 per euro by late next year and of domestic money market rates. The statement justifies today’s additional policy tightening by referring to updated macroeconomic forecasts that anticipate somewhat higher real GDP growth of more than 3% and inflation this year above the 2% target. Czech inflation is projected to return to 2.0% by late 2019, and the new inflation path has been revised slightly downward.

Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without expressed permission.

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