Wednesday, December 21, 2011

Ceska Narodni Banka Holds Repo Rate at 0.75%

The Ceska Narodni Banka held the two-week repurchase rate at 0.75% as expected, and kept the discount rate unchanged at 0.25% and Lombard rate at 1.75%.  The Bank said: "The risks to the forecast for inflation and interest rates are slightly on the upside compared to the baseline scenario of the existing forecast.  The risks to the forecast for GDP and the exchange rate are tilted towards the alternative scenario as foreign developments have moved towards the materialisation of this alternative."

 The Czech central bank also kept the repurchase rate unchanged at its November meeting this year; its last change was a 25 basis point cut in May 2010.  The Czech Republic reported annual inflation of 1.8% in September, compared to 1.7% in August and July, 1.8% in June, 2% in May, 1.6% in April, and 1.7% in March this year, and within the Bank's official inflation target of 2%.  

The Czech economy contracted by -0.1% in Q3 (0.1% in Q2, 0.9% in Q1) this year, placing annual GDP growth at 1.2% (2.2% in Q2, 2.8% in Q1).  The Czech Republic's currency, the Koruna (CZK) has weakened about 4% against the US dollar this year, and the USDCZK exchange rate last traded around 19.60


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