Czech Republic: Central Bank leaves interest rates unchanged for the 13th consecutive month
June 23, 2011
At its 23 June meeting, the Central Bank left the two-week repurchase rate unchanged at a record low of 0.75%, in a decision widely expected by the market. The Bank has not altered the main policy rate since May 2010, when monetary officials last cut interest rates by 25 basis points. At the current level, the two-week repo rate remains 50 basis points below the European Central Bank's policy rate. According to the Central Bank, headline inflation remains close to its inflation target of 2.0% 1.0% over the near-term monetary policy horizon. In addition, monetary officials stated that ongoing economic growth is not pro-inflationary, as is mainly driven by the external sector. In contrast, domestic demand remains weak, mainly as a result of the austerity measures adopted by the government at the start of this year. In addition, monetary officials stated that they may begin to raise interest rates gradually rise in the last quarter of this year. The next monetary policy meeting is scheduled for 4 August.
Author: Ricardo Aceves, Senior Economist