Czech Central Bank Vice Governor, Jan Frait stated in an exclusive interview on Monday that the policy meeting is next week and there could be a point five interest rate cut hinting at such a possible move this time round.
This statement has been made after four consecutive fifty basis point cuts that have been made with an aim of paving way for better economic conditions in the Czech market. As noted by Frait, the current monetary policy by the Czech National Bank or CNB is about to embark on the final tuning and as such, there will be no drastic shift of the interest rates.
He emphasised that the current international economy engulfs more on the fine-tuning of the monetary policies for the continuing economic progress and stability of the general price level. While not precluding rate cuts down to 0, Frait does not agree with the practice of eliminating interest.
Only 5% in future, he also re-emphasized that before embark upon different decision, the central bank will look into all the information and opportunities.
Regarding the final decision over whether to implement a 25 or 50 basis point for change, this will have to be done after an assessment of the available instruments in the economy and the set goals towards inflation. The Czech Republic’s central bank employs rate changes frequently as a way to respond to shocks that originate from foreign nations and maintain stability in the nation’s economy.
The following are the key observations from Frait’s comments: Based on Frait’s ideology, data are primary, and monetary policy will be further balanced according to shifts in the environment. Economists and market analysts will wait for future policy intentions and potential new interest rate trends when the next meeting of the monetary policy committee is convened.
Czech Koruna and the securities may have greater fluctuations in the period before the meeting due to increasing anticipation of what decision the central bank may make. Therefore, the Vice Governor of the Czech Central Bank has considered the likelihood of additional reduction of half-point for the remaining fine-tuning period.
