Czech central bank holds 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 by financial markets, and will comment on its decision later.
    At its previous meeting in March, the Czech National Bank (CNB) said rates would remain at their current level over a longer horizon until inflation pressures increase significantly.
    Inflation in the Czech Republic was steady at 1.7 percent in March from February, below the central bank's target of 2.0 percent, plus/minus one percentage point.
    The CNB also said it was ready to use foreign exchange intervention if further monetary policy easing becomes necessary, a remark that sparked speculation in markets that the CNB's board would discuss a possible sale of koruna at today's meeting.
    The Czech Gross Domestic Product declined by 0.2 percent in the fourth quarter of 2012, it's sixth quarterly contraction in a row, for an annual fall of 1.7 percent, up from a decline of 1.5 percent in the third quarter. For the full 2012 year, the economy shrank by 1.2 percent.
    The CNB cut its rate by 70 basis in 2012 to technically zero and has held it steady this year. Today it also left the discount rate steady at 0.05 percent and the Lombard rate at 0.25 percent.

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