Czech National Bank

September 27, 2017

Monetary officials kept their 2-week repo rate at 0.25% at today’s policy review after having broken a streak dating back to November 2012 when such had been pinned at 0.05%. A ceiling on the koruna at 26.0 per euro, which was introduced in November 2013, was lifted back in April, but authorities reserve the right to intervene in foreign exchange on occasion to keep market conditions orderly.

Czech economic fundamentals constitute a decent mix, with recent economic growth and the average wage increasing much faster in Q2 than the central bank’s forecast and a current account surplus exceeding 1% of GDP. A statement released by the Board says this about inflation, now 2.5%, and the likelihood of more interest rate increases in the future:

According to the current forecast, inflation will stay in the upper half of the tolerance band around the target for the rest of this year and decline towards the 2% target at the start of next year. Following the August rise in interest rates, a further increase in rates over the next two years is consistent with the forecast. The Bank Board assessed the risks to the current forecast as being slightly inflationary.

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




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