Czech Republic Monetary Policy

Czech Republic

Central Bank maintains interest rates unchanged

At its 26 September monetary policy meeting, the Czech National Bank (CNB) left the two-week repurchase rate unchanged at 0.05%, in a decision that matched market expectations. The Central Bank has maintained the two-week repo rate at a record low since November 2012, which is the last time monetary officials cut the main monetary policy rate, reducing it by 20 basis points.

As in previous statements, the Central Bank noted that interest rates will remain at the current level (at "technical zero") over a longer period while inflation pressures remain subdued and economic activity is depressed. Although the Bank acknowledged that the likelihood of its intervention in the foreign exchange market to further ease monetary policy remains high, monetary officials decided not to launch the exchange rate intervention yet.

The CNB pointed out that GDP growth continues to deteriorate in year-on-year terms and added that the labor market remains stagnant. Regarding price developments, monetary officials see that inflation pressures are virtually imperceptible. The next policy meeting is scheduled for 17 November.

Analysts polled by FocusEconomics panelists expect that the Central Bank will maintain the two-week repo interest rate unchanged at 0.05% until the end of 2013, with the average forecast at 0.08%. For 2014, participants see the two-week repo rate at 0.43%.

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Czech Republic Monetary Policy Chart

Czech Republic Monetary Policy September 2013

Note: 2-week repo rate in %.
Source: Czech National Bank (CNB).

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