PRAGUE, Oct 19 (Reuters) – The Czech National Bank is expected to keep interest rates unchanged for the time being as the mortgage market collapsed and signs of near-peak inflation were only flimsy, a Board member Oldrich Dedek said Thursday.

Dedek voted in the minority for stable rates throughout the central bank’s one-year tightening cycle that raised the main rate by a total of 675 basis points, ending in June.

Since then, the two-week repo rate has stood at 7.00%, although the annual inflation rate has reached 18%, driven mainly by soaring energy prices affected by supply interruptions. gas and oil and Russia’s aggression against Ukraine.

Dedek pointed to flat underlying inflation and central banks around the world increasingly talking about recession as factors in rate stability.

“At the moment, rate stability is favourable,” Dedek said in an interview published by the economic weekly Ekonom.

“Cuts may be considered when disinflation pressures begin to show and inflation returns to its 2% target,” he said.

Governor Ales Michl, Dedek’s only ally to vote against the hikes before taking over as head of the seven-seat board in July, maintained his support for rate stability in his new role.

With three new members, the majority swung and the revamped board kept rates unchanged at the last two meetings in August and September. The next decision is expected on November 3.

Dedek said that although data from the national economy suggests the peak of inflation could be near, the signals have been “fragile” so far. He also said that when that point is reached, an end to central bank interventions to support the krone currency, in place since mid-May, could be considered.

“Until then, I would be cautious to leave the exchange rate open to market forces,” he said. (Reporting by Robert Muller in Prague Editing by Matthew Lewis)

About The Author

Related Posts