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UPDATE 1-Czech central bank chief: crown firming can slow rate hikes -CTK
June 21, 2017 / 8:31 AM / 6 months ago

UPDATE 1-Czech central bank chief: crown firming can slow rate hikes -CTK

(adds other central bankers’ comments)

PRAGUE, June 21 (Reuters) - A strengthening Czech crown may lead to a slower rise of interest rates, possibly pushing a move beyond the third quarter projected in the central bank’s latest economic outlook, Governor Jiri Rusnok was quoted as saying on Wednesday.

Rusnok’s comments were in line with recent remarks of other central bankers, including bank board member Marek Mora or Vice Governor Vladimir Tomsik.

The seven-strong board will meet on June 29 to assess risks to its staff outlook released in May.

“Yes, it (rate hike) can come in the third quarter, however that is rather a model calculation, but from the monetary-policy view it does not look like it,” Rusnok said in an interview with Czech news agency CTK.

“If there is a raising of rates, it would be in small steps. Should the crown continue with its strengthening, that can be a reason for a slower rise of rates,” he said.

The central bank ended a cap on the crown in April, abandoning this tool after more than three years during which it prevented the crown from firming beyond 27 to the euro in order to spur inflation.

That opened the door to a rise in interest rates, which would be the first rate hike in almost a decade.

After the central bank freed the crown, it had settled around 26.50 versus the euro in May but then jumped to 26.115 last week, 3.4 percent stronger than the former cap. It traded around 26.32 on Wednesday morning.

Czech gross domestic product has been growing among the fastest in the European Union, pushing unemployment in the country to the lowest level in the 28-member bloc. (Reporting by Robert Muller; Editing by Alison Williams)

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