Czech National Bank Left 2-Week Repo Rate at Record Low of 0.50%

August 2, 2012

From May 6, 2010 until June 28 of this year, the key Czech central bank interest rate had been at 0.75%.  It got to that level via a series of eight reductions totaling 300 basis points between August 2008 and May 2010.  With three dissents out of seven Bank Board members, monetary officials agreed to end this pause five weeks ago even though inflation was slightly above the 1-3% target range.  A follow-up easing was not implemented this week.  One deterrent as in Romania is the vulnerability of the Czech currency, and another is that CPI inflation of 3.5% as of June remains above target.  Core inflation has been lower than the headline figure, and officials do expect in-target inflation to emerge in time.  They do not anticipate a rise of GDP in calendar 2012.

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



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