Czech hold rates steady, no statement on FX sales

    The central bank of the Czech Republic held its benchmark two-week repo rate steady at 0.05 percent, along with the discount rate at 0.05 percent and the Lombard rate at 0.25 percent, and made no announcements regarding possible intervention in foreign exchange markets.
    In May, the Czech National Bank (CNB) had said it was ready to use foreign exchange intervention if further monetary policy easing becomes necessary but minutes from its meeting showed that only three of the board's seven members want immediate action.
    The Czech koruna has been weakening against the euro since September last year when the central bank's governor for the first time signaled that it may sell the currency in markets. This year, the koruna is down a further 3.4 percent, quoted at 25.96 to the euro earlier today.
    The Czech Gross Domestic Product contracted by 1.3 percent in the first quarter from the fourth, the seventh quarterly contraction in a row. On an annual basis, first quarter GDP shrank by 2.4 percent, up from a 1.7 percent decline in the fourth quarter.

    Inflation rose to 1.6 percent in June from 1.3 percent the previous month but still well below the central bank's 2.0 percent target, plus/minus one percentage point

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