Czech Republic: Central Bank keeps two-week repo rate unchanged
November 6, 2014
At its 6 November monetary policy meeting, the Czech National Bank (CNB) decided to leave the two-week repo rate unchanged at 0.05% for the 16th consecutive meeting. The Central Bank also reiterated its commitment to intervening in the foreign exchange market in order to keep the Czech koruna at around CZK 27.0 per EUR. The floor for the exchange rate was set in November 2013.
In its accompanying statement, the CNB said that economic growth will accelerate in the last quarter of the year. The improvement will be fostered by higher external demand, accommodative monetary policy and a pickup in government investment. In addition, the Bank acknowledged that new jobs are being created and that wage growth, especially in the business sector, is expected to increase noticeably in the near future.
Regarding price developments, the CNB pointed out that headline inflation rebounded in recent months, but that it is still below the lower bound of the Bank’s target range. CNB added that, “[t]he low inflation was due to a continuing decline in administered prices and subdued inflation in the euro area.” Looking ahead, growth in consumer prices is expected to accelerate next year and exceed the 2.0% target at the beginning of 2016.
Author: Dirina Mançellari, Senior Economist