Czech National Bank Policy Still on Hold

February 2, 2012

The two-week repo rate has been pinned at 0.75% since a 25-basis point cut twenty months ago culminated an eight-move easing that also included 150 bps of cuts in 2008 and 125 bps of cuts in 2009.  By a 6-0 unanimous vote with one absentee, the CNB’s Board decided to keep the rate at its record low.  Inflation is projected to hover near its 3% target in spite of this year’s higher value added tax rate. No GDP  growth is likely this year.  Domestic demand is weak, and wage growth remains moderate.  Downside risk to the Czech currency, the kuroda, continues to be a policy consideration.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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