Czech National Bank Reaffirms Elements of Accommodative Monetary Policy

May 7, 2014

The two-week Czech repo rate has been at 0.05% since November 2012.  One year later, a cap on koruna appreciation at 27 per euro was added to the policy arsenal to prevent monetary conditions from tightening further via a strengthening currency without any offsetting cut in short-term interest rates.  Today’s statement from the central bank reminds us of the asymmetric construction of the koruna policy, since any decline in the Czech currency will not be resisted.  Like much of Europe, Czech growth has been livelier of late.  Consumer prices were only 0.2% higher in March than a year before.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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