Czech central bank chief: Another rate hike likely, 75bps or more


Central Bank Governor Jiri Rusnok attends a news conference in Prague, Czech Republic April 6, 2017. REUTERS/David W Cerny

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PRAGUE, June 6 (Reuters) – The Czech National Bank is expected to raise interest rates again at its June 22 meeting as the economy continues to be inflationary, Governor Jiri Rusnok said on Monday.

The Czech central bank has raised its main two-week repo rate (CZCBIR=ECI) by 550 basis points to 5.75% over the past year as it seeks to rein in soaring inflation by high energy prices, as well as solid domestic demand, and to keep inflation expectations anchored.

“Everything indicates that we still have to increase (with the rates). Our forecast was expecting higher rates than what we chose at the last policy meeting. And the development is, unfortunately, inflationary,” Rusnok said. at the information site .

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Although he said he didn’t want to preempt anything, Rusnok said another sharp rise seemed necessary, namely to support the krone exchange rate on which the bank relies to provide some of the tightening.

“So far, we know that the krona is weaker than what our scenario was counting on. Therefore, we cannot limit ourselves to a ceiling. So (the rise) looks like three quarters of a percentage point or more,” Rusnok said in the interview.

Rusnok’s term expires at the end of June and he will be replaced by current board member Ales Michl, who opposes the central bank’s tightening cycle.

President Milos Zeman has yet to pick three names on the seven-seat board by July, which could sway the majority on the board toward Michl’s position.

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Reporting by Robert Muller; Editing by Kim Coghill

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