Vladimír Urbánek (Kurzy.cz)
Macroeconomics  |  September 27, 2012 14:14:18

CNB goes into battle with a weak economy


Board today at its regular meeting decided that the CNB will fight with acute bad economic situation. To support the economy used its standard instrument, the interest rate. Base rate fell by a quarter percentage point, and gained the next historic low (0.25%).

The central bank then goes into battle with sagging economy. Most troubling her weak consumer demand, which is for the whole economy as a heavy ball. People do not buy taste, so contribution of household consumption to overall economic growth in the last quarter -1.7 ppIf people consume just like last year, the economy would definitely not in crisis, as it is now.

Still, it's a big question mark to what extent it will be effective and the rate change will be reflected in the real economy. Because despite the reduction in rates at the end of June there is a fundamental change in consumer behavior. They are still more than skeptical about the current economy. While unemployment is not a dizzyingly high and is not likely to grow in value, such as those in the Slovak Republic. Therefore, consumers need to deliver optimism into veins and return confidence that the economy is healthy and growing again.

Czechs generally owes 1,221 billion, mortgage interest is

Total indebtedness at the end of August increased by 3.8% to 1.221 billion CZK. Purely inhabitants debt to banks rose by 4.04% to 1.117 billion CZK. Such borrowing rate is very mild and taking into account current inflation is conservative. It shows the mood of the population and their expectations that the economy will improve in the near future. Yet they are the consumers themselves who their economy low power brakes.

Current household debt is growing mainly due to housing loans, ie mortgages. Demand for mortgages current record low interest rates, which are currently a record low. And it still may not be their bottom. Czech National Bank reduced its rates, and it should also have a positive effect on the prices of housing loans. Prices of apartments outside of Prague in the last year fall and for a number of candidates is now convenient time when you buy a home.

Ing. Michal Kozub
Analyst
Home Credit as

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