No Change Either in Czech Central Bank Rate

November 4, 2010

In a day that already saw central banks in Hong Kong, Indonesia, Britain, and the Euroland leave key interest rates and other policy settings unchanged, the Czech National Bank kept its two-week repo rate at 0.75%, matching what analysts anticipated.  In a 5-1 decision, one dissent in favor of a 25-basis point hike was cast, as such was at the prior meeting in September.  The majority view expects Czech GDP growth to slow to somewhat less than 1.5% in 2011 from somewhat more than 2.0% this year, believes that headline and core inflation will hover very near the 2.0% target throughout the two-year policy-relevant time horizon, and postulates a likely rate path that remains flat near current levels over the near term before rising gradually from the second half of 2011.  Forecast risks are considered mild and balanced.  Consumer prices in September were 2.0% above year-earlier levels.  The dissenting vote reflected one policymaker’s view that inflation would climb above the 2.0% target later in the forecast period.

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.



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