PRAGUE: The Czech National Bank (CNB) is expected to keep interest rates unchanged on Wednesday and for the rest of the year as the policy outlook in major world economies has tilted towards easing and domestic inflationary pressures appear to be peaking, a Reuters poll showed.
The poll showed that all 14 analysts forecast the main, two-week repo rate to stay at 2.00pc. The central bank raised the rate by 25 basis points to this level in May.
Looking further ahead, 12 of 13 analysts saw no change to rates this year. One expected a hike to 2.25pc in August.
A majority of the respondents saw rates stable through the second quarter of 2020, in line with the central bank, which signaled broad stability of rates until mid-2020 at its last policy meeting on May 2.
The minority who saw a move in early 2020, diverged on its direction.
Three predicted another increase in the first quarter of the next year; two saw a cut.
Since the bank's May meeting, inflation has accelerated to 2.9pc, above the central bank's forecast and just inside its target band of 1-3pc.
Meanwhile, Germany cut its growth outlook for this year by a half, signalling possible trouble for the Czech exports. The Czech economy relies on exports for much of its performance, with the automotive industry as the biggest sector.
Regarding global monetary policy, CNB board member Oldrich Dedek said in a Reuters interview last week that more Czech rate increases would go "against the tide".
European Central Bank President Mario Draghi in a speech last Tuesday called for "additional stimulus" in the absence of any improvement in weak growth and tepid inflation, which has fallen below the central bank's target of close to 2pc since 2013.
The US Federal Reserve kept rates steady last Wednesday but signalled it was ready to cut rates beginning as early as next month.
Governor Jiri Rusnok will comment on the seven-member board's decision at a news conference on Wednesday at 2:15 p.m. local time (1215 GMT), where he will also present an assessment of risks to the central bank's staff macroeconomic outlook.
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