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Czech Republic to continue forex intervention regime til 2016

Xinhua, February 6, 2015 Adjust font size:

After a Czech National Bank (CNB) board meeting on Thursday, bank governor Miroslav Singer said at a press conference that the board would not end the forex intervention regime before the second half of 2016.

The board also reiterated that, in the case of a long-term decline in prices, and if inflation growth expectations decrease and deflation development risks of the domestic economy are renewed, it was ready to proceed to a further weakening of the Czech currency. This would mean shifting the pledge to maintain the limit of 27 Czech koruna to 1 euro to weaker values.

Singer also reiterated on Thursday that the subsequent return to a normal monetary policy system would not mean a stronger exchange rate of the Czech koruna to the level before the start of the forex intervention.

Thursday's newly-released macroeconomic forecast expects market interest rates to remain stable at the very low levels they are at currently, and use the exchange rate as an instrument of monetary policy until the end of 2016. The CNB also predicted an improvement of Czech economy for year 2015 in its forecast. Endit