The Czech central bank (CNB) will not adjust its weak crown policy or postpone the planned exit from the programme at its March 26 board meeting, but may expect the market to test its resolve to defend the exchange rate cap at some point, a Reuters poll showed on Tuesday.
Eleven out of 12 analysts in the poll said the bank will not announce any postponement of the planned exit, now seen in the second half of 2016 at the earliest. The bank has already delayed the exit several times as deflationary pressures from weak energy prices prevent a revival in consumer price growth.
The poll showed that the bank is likely eventually to delay the end of the regime again sometime in the coming months.
Only three of 14 analysts pushed back their forecast of exit timing, now expected in the range from the second half of 2016 to the third quarter of 2017. The previous poll in February gave the earliest exit timing in the second quarter of 2016.
The crown has gained 1.1 percent against the euro since the beginning of this year, and in March it touched its strongest level since the interventions regime was launched in November 2013.
All the respondents said the bank would be at some point forced to defend the cap preventing the crown from strengthening beyond 27 crowns per euro .
Several members of the CNB board said last week the bank did not need to adjust the level of its cap on the crown, but was ready to defend it and keep the policy in place for longer if deflationary pressures from abroad kept coming.
Czech consumer prices grew 0.1 percent annually in February. The bank said at its last monetary meeting on February 5 it would tolerate zero, or even mildly negative inflation during 2015, as it expects price growth pace to move towards the CNB's 2 percent target in 2016.
The following table summarises the results of a regular Reuters poll on interest rate forecasts of analysts focusing on the Czech economy. The poll was conducted among 16 analyst groups between March 17 and 23.
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