International Property News

Central bank leaves interest rates at 3.75%

3rd April 2008

Thursday's meeting of the Czech National Bank (CNB) governing board, which did not have monetary policy issues on the agenda, has ended, leaving the main interest rate at 3.75 percent, CNB spokeswoman Pavlina Bolfova told CTK.

The CNB last changed interest rates early in February raising them by a quarter point. At the end-March meeting, six out of seven members of the CNB board voted to keep interest rates unchanged, and one was for a rate hike of a quarter of a percentage point.

Economists are split on what will be the central bank's next steps. Many analysts expect the CNB to leave interest rates unchanged in the rest of this year, while others forecast a growth to four percent.

"We are in a situation where we really do not know what will be the further development. Future data will tell us more. It is very difficult to predict what will be the next step," CNB vice-governor Miroslav Singer said last week.

The bank board stated that making decisions on the monetary policy is harder at present than it was in the past, he added.

Speaking for a further price growth, and therefore for monetary policy tightening, is higher inflation that climbed to 7.5 percent in January and February, while the strong Czech crown currency and the unfavourable economic development in the world are working in the opposite direction.