The Czech central bank held its key interest rate unchanged for a twenty-fourth straight policy session and affirmed its currency exchange rate commitment, as policymakers explore ways to tackle anti-inflationary risks.
The Czech National Bank Board kept the two-week repo rate at 0.05 percent, in line with economists’ expectations. The discount rate was retained at 0.05 percent and the lombard rate at 0.25 percent.
The bank repeated its commitment to intervene on the foreign exchange market if needed to weaken the koruna so that the exchange rate of the currency against the euro is kept close to CZK 27/EUR. The central bank reiterated that the exchange rate commitment is one-sided.
The CNB had set the exchange rate floor in November 2013. In September, the bank forecast that the exchange rate would be used as a monetary policy instrument until the end of 2016.
Inflation has remained well below the bank’s 2 percent target for more than two years. In September, inflation was 0.4 percent, unchanged from the previous month.
The minutes of the September meeting showed that policymakers decided to adopt a ‘wait-and-see’ approach to determine whether inflationary tendencies will materialize in the domestic economy. They also assessed that the low inflationary tendencies in some European countries were having the biggest effect on the Czech economy.
The material has been provided by InstaForex Company – www.instaforex.com