Czech National Bank Policy Unchanged at Latest Meeting

June 29, 2017

The central bank’s key two-week repo rate has been at 0.05% since November 2012, but an asymmetric foreign exchange policy that prevented the koruna from strengthening beyond 27 per euro in the period from November 2013 was ended this past April 6. A statement after the latest CNB policy review is upbeat about growth prospects and predicts that interest rates will climb eventually. “The exit from the exchange rate commitment in April was the first step towards a gradual return of the overall monetary conditions to normal.” The statement observes, “The CNB Bank Board assessed the risks to the current inflation forecast at the monetary policy horizon as being slightly inflationary. The observed stronger growth in domestic economic activity and wages may act in this direction. The koruna exchange rate remains a significant source of uncertainty.” These guidelines implicitly imply that ECB policy will also become less stimulative as time goes by.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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