Wednesday, February 6, 2013

Czech Republic holds key rate steady at 0.05%

    The Czech Republic's central bank left its benchmark two-week repo rate steady at 0.05 percent, as expected, and will provide further details of its decision on Thursday.
    The Czech National Bank (CNB) cut its key rate by 70 basis points in 2012 and left rates unchanged at its previous meeting in December when it said the risks to inflation were on the downside.
     The headline inflation rate in the Czech Republic fell further to 2.4 percent December, a new low for the year, from November's 2.7 percent. The central bank targets inflation of 2 percent within a plus/minus one percentage band.
    It has forecast that inflation would remain above 2 percent most of 2013 and then decline to below the midpoint of its range in the first quarter of 2014.
    The country's Gross Domestic Product contracted by 0.3 percent in the third quarter from the second quarter, the second quarterly contraction in a row, accelerating the annual economic shrinkage to 1.3 percent from a 1.0 percent contraction in the second quarter.


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