Czech National Bank Cuts Rate Again But Keeps Stance in Restrictive Territory

May 2, 2024

The CNB two-week repo rate was lowered by 50 basis points to 5.25% at today’s policy review, bringing the cumulative decline since December to 7.0% where such had previously been since June 2022. The vote to reduce the interest rate was a unanimous one. Czech consumer price inflation was 2.0% in both February and March, which matches the medium-term target used since 2010. That’s still well below the new repo rate level by explicit intent. According to a released statement,

 The Bank Board still sees modestly inflationary risks in the outlook. Their materialisation would mean that inflation would diverge from the target towards the upper boundary of the tolerance band of plus-or-minus 1 percentage point in the quarters ahead. The Bank Board therefore considers it necessary to persist with tight monetary policy and approach further rate cuts with great caution.

Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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