Mediafax (Mediafax)
Macroeconomics  |  September 27, 2012 16:05:06

Singer: CNB interest rates can be reduced to zero


PRAGUE (MEDIAFAX) - The legal or technical problem, according to the governor of the Czech National Bank (CNB) might be to reduce interest rates to negative values. They drop to zero is possible in the future, he had heard on Thursday CNB Governor Miroslav Singer.

"Headline inflation is the monetary policy horizon as a result of tax changes easily move over to the CNB. Against that monetary policy inflation will be in the lower half of the target tolerance band," said Governor Singer after the meeting CNB Bank Board.

Singer noted that the Czech economy in the second quarter of this year declined qoq and yoy. "GDP of the Czech Republic currently only supports net exports. Development of industrial production, construction and retail continue to indicate the contrary, continued subdued economic activity," said Singer.

Risks of the forecast of further development of consumer prices are generally the advice CNB downside, which is primarily for the stronger exchange rate, weaker domestic economic activity, lower wage growth, but also domestic price developments. Upside risk are opposed to higher world prices of energy and agricultural commodities.

The Bank Board of the Czech National Bank at its meeting on Thursday cut its base lending rate (repo rate) to a new historic low, ie 0.25 percent. The meeting was attended by all seven members of the Board. To reduce the rate of them raised a hand of five, the other two bankers voted to leave rates unchanged.

Czech National Bank is the central bank of the Czech Republic and the supervisor of the financial market. The main objective of the CNB is to maintain price stability. CNB also determines monetary policy, issues banknotes and coins and manages the circulation.

(The report gives the agency Mediafax photo.)

Jan Soukup, soukupj@mediafax.cz

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