Friday, March 30, 2012

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: "As regards the reasons for the decision, they are quite obvious. According to the forecast, monetary-policy relevant inflation will be close to the inflation target. Headline inflation is currently rising above 3%, but it should fall later on. Monetary-policy relevant inflation, of course, remains near the target for the whole period up to the horizon we influence."

The Czech central bank also kept the repurchase rate unchanged at its February meeting this year; its last change was a 25 basis point cut in May 2010.  The Czech Republic reported annual inflation of 3.7% in January this year, up from 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 -0.1% in Q3, and grew 0.1% in Q2 (0.9% in Q1) last year, placing annual GDP growth at 1.2% in Q3, 2.2% in Q2 (2.8% in Q1).  The Czech Republic's currency, the Koruna (CZK) has weakened about 8% against the US dollar over the past year, and the USDCZK exchange rate last traded around 18.57


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