PRAGUE (Reuters) – The Czech National Bank will probably keep interest rates unchanged until the end of 2020 as the board balances inflationary pressures in the domestic economy with a weaker situation abroad, a Reuters poll showed on Monday.
The central bank is one of the few in Europe which has still been discussing rate hikes, while the European Central Bank maintains loose monetary policy amid a dimmer outlook for the euro zone.
A Reuters poll showed that none of the participants expected any move in the CNB’s main two-week repo rate CZCBIR=ECI, currently at 2.0%, until the second quarter of 2020.
Nine economists saw rates unchanged until the end of the third quarter 2020 and seven until the end of that year.
Five analysts saw one rate cut or more next year, with the first two expecting a loosening of policy in the second quarter.
Although the Czech economy looks set for a slowdown next year, it remains supported by robust domestic demand, which draws strength from Europe’s tightest labor market.
Consumer price growth accelerated to 3.1% year-on-year in November, data showed last week, just above the central bank’s tolerance band set at one percentage point either side of its 2% target.
Tomas Holub, one of two central bankers who voted in favor of a rate hike at the last meeting, on Nov. 7, said last week that he may stick to that view. The other hawkish member Vojtech Benda said that the situation was rather mixed now.
They both said that the firmer crown helped to tighten monetary conditions.
None of their colleagues suggested that they could join the pro-tightening camp.
The bank last tightened policy in May, when it delivered its eighth rate increase since 2017.