Czech rate hikes over for now as ECB, Fed turn to be easier

According to a poll by some analysts at Reuters on Monday, as the ECB and US enter into cheaper policies, the Czech central bank is likely to keep pending interest rates for the rest of 2019 and possibly by 2020.

The 13 analysts interviewed in the survey provided by the Czech National Bank (CNB) will not make any difference to the two-week baseline repurchase rate – which now stands at 2.00% after eight increases since 2017, the latest in May – on August 1st.

The bank has said that a pause in policy moves may last until mid-2020, balancing a still-stable domestic economy with signs of eurozone weakness, global trade tensions, and uncertainties over Britain’s divorce from the European Union.

But she has not given any firm commitment to a date or any clear indication of what other move could be after the cramp.

Seven analysts predict stability by 2020.

Two expected an increase next year in the second or third quarter, while three others saw a downturn that came in the first or third quarter of 2020. An analyst did not give an opinion.

Three other analysts said the rate hikes would continue, but not by 2021.

Markets, through exchange rate deals, are priced at a rate cut rate by the end of 2019.

“Given the ongoing foreign uncertainties,” wait and see “for the next quarters seems to be the most probable scenario,” ING analysts said in a report.

The Czech economy has remained alive in the face of mildness in the eurozone, especially in the main German partner.

Unemployment is low and wage growth is historically strong by keeping price pressures. Total inflation was 2.7% in June, in the upper range of the bank’s tolerance band around a target of 2%.

But the export-driven economy is very much lit in the car sector and conditions abroad.

The ECB set the stage for facilitating policy at a meeting last week and markets expect the Fed to lower rates this week for the first time since the depths of the financial crisis more than a decade ago.

Czech central bank governor Tomas Nidetzky told Reuters last week that the stability of the rates, as seen from the bank’s point of view, was still the most probable scenario and that the bank should not automatically chase the ECB or the Fed./Investing.com

 

Stay updated with INFOEUROPEFX to find out the latest news about economy.