The Czech central bank will keep its key two-week repo rate at an all-time low of 0.75 percent for the rest of 2012 as the latest pick up in inflation driven by a tax hike subsides, while growth remains close to zero, a Reuters poll showed.
Fourteen out of seventeen analysts in the poll saw no change in official interest rates this year. The remaining three expected a change in the second half of the year, with one seeing a quarter-point hike and two forecasting a cut of the same size. Eight of the fourteen seeing flat rates through 2012 predicted a quarter-point hike in the first half of 2013 while six saw the hike even later.
Inflation hit 3.7 percent in February, more than a three-year high and markedly above the upper range of the bank's tolerance band around its 2 percent target. The bank said the data posed a moderate upside risk but core inflation, a measure of demand-led pressures and closely watched by the bank, remained negative amid dampened domestic consumption.
The crown currency, a key variable in the bank's inflation outlook, posed no risk for the forecast as its average rate in the first quarter was 25.1 per euro close to the bank's expectations for 25.5. The following table summarises the results of a regular Reuters poll on interest rate forecasts of analysts focusing on the Czech economy. The poll of 17 analyst groups was collected between March 19 and March 23.