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UPDATE 1-Czech central banker Dedek: no reason to question possible hike in Q3
June 8, 2017 / 7:12 AM / 5 months ago

UPDATE 1-Czech central banker Dedek: no reason to question possible hike in Q3

(Adds Dedek on exchange rate)

PRAGUE, June 8 (Reuters) - Czech central banker Oldrich Dedek said he saw no reason to question the bank’s staff forecast which suggests a rate hike in the third quarter of 2017.

The Czech National Bank abandoned its weak crown policy on April 6, after it had prevented the currency from strengthening beyond 27 to the euro for three and half years, buying 75.9 billion euros in the process.

The bank’s staff forecast, released in May, showed interest rates could rise in the third quarter, while analysts forecast such a move only in the first half of 2018.

“There is no reason to question the forecast. That does not mean, however, that the forecast is something the board upholds in all circumstances,” Dedek said in an interview published on Thursday by Czech economic daily paper E15.

Dedek declined to speculate when asked whether it was realistic to expect a rate rise this year.

Analysts have pinned the crown’s development after the exit as a key factor as to when the central bank may make its first rate hike in almost a decade.

The currency has firmed 2.7 percent since being set free, less rapid appreciation than many investors expected when they bet on a jump, sending billions of euros into the market in the months before the cap exit that have yet to be cleared out.

In the interview, Dedek said the bank was satisfied with the crown development post-cap “even when we do not know how it will be in the future, but like they say, so far, so good.” (Reporting by Robert Muller; Editing by Janet Lawrence)

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