CNB Vice-Governor states that Czech interests will not change

12 Sep 2019

Czech National Bank Vice-Governor Marek Mora stated that the interest rates will not be changing in the coming year as a way to control domestic inflationary pressures. This should be done despite global banks worldwide are opting to change to ease their policy. 

With lower unemployment rates and high wages, reflected in consumer spending, the Czech economy has been growing steadily. The Central bank had aimed to keep inflation at 2% , whereas it remained at 2.9% YoY in August. May’s rate hikes were paused after its two-week repo rate to 2.00%. 

However, the country is being pressured by its trading partners – Germany is moving towards a recession whilst the ECB and the U.S. Fed are loosening monetary policy, as preparation to battle any threats that may be caused as a result of global trade tensions. 

The Vice-Governor explained, ‘For me right now it means to more or less wait," he told Reuters in the interview on Tuesday. "We can call it rather rate stability, that is how I would see it in a one-year horizon.’   

The Czech crown weakened by 1.7% since the July, with tensions between China and the U.S. and rising concerns about the UK and on the terms,  it will leave the EU. Despite the decline, a number of analysts estimate that the currency will strengthen if the ECB loosens its monetary policy. 

Mora also noted that exports have grown by 2.9% since 2014, ‘Even in case of some global slowdown or recession, there can be a slowdown here, but it does not have to be a recession and definitely I would not speak of crisis.’