Czech Republic: Central Bank maintains rates on hold for the 17th month in a row
December 21, 2011
At its 21 December monetary policy meeting, the Czech National Bank left the two-week repurchase rate on hold at a record low of 0.75%, in a decision widely expected by the market. The Central Bank has not changed the main monetary policy rate since May 2010. At the current level, the two-week repurchase rate remains 25 basis points below the European Central Bank's main policy rate, which was recently lowered by 25 basis points to 1.00% on 8 December 2011. In the Bank's statement, monetary authorities argued that inflationary pressures will remain subdued, despite the government's decision to increase VAT from 10.0% to 14.5% in January 2012. Moreover, the Bank stated that economic growth will continue to soften, in the wake of the debt crisis in the Eurozone, which is the country's main exports destination. The next monetary policy meeting is scheduled for 2 February.
Author: Ricardo Aceves, Senior Economist