No Change in Czech Central Bank Rate of 1.50%

June 25, 2009

Most analysts were fooled by the Czech Central Bank’s split 4-1 decision not to cut its 2-week repo rate any further after today’s policy meeting.  Earlier reductions had been implemented of 75 basis points on November 7, 50 basis points each on December 18 and February 6, and 25 bps each on August 8 and May 7.  Considerations at the policy meeting were presented at a press conference.  CPI inflation of 1.3% is below the 2-4% target range and likely to move lower in the near term, but officials see such rising to near the target floor by the end of next year.  Officials apparently do not want to expose the Czech koruna to undue selling pressure and may have been influenced by indications that the ECB has stopped cutting its refinancing rate.

Copyright Larry Greenberg 2009.


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