Friday, June 27, 2008

Central bank retains interest rates.

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Central bank retains interest rates. The central bank’s governing board left the benchmark interest rates unchanged at its monetary session on Jun 26, in line with expectations. The benchmark repo rate was last raised by 25bps to 3.75% on Feb 7. All 7 board members attended the voting – six of them voted for preserving the monetary stance and one for a rate hike of 25bps. The decision was backed by continuing appreciation of the exchange rate vis-à-vis the euro, downward correction in the CPI inflation to 6.8% in May from 7.5% in February and 7.1% in March, and risks of weakening external demand. Central bank governor Zdenek Tuma noted that inflation development was in line with the bank’s forecasts. Still, Tuma admitted that small cost price shocks on part of growing oil and energy prices, as well as higher excise tax on cigarettes might appear in the summer months, underlying he is confident that inflation is to decelerate to the 3% target at end-year. Major risks and uncertainties to the new projections, were slightly pro-inflationary, Tuma said – on the upside are higher outlook for 1-year EURIBOR, higher outlook for oil prices and faster growth in wages in the business sphere; on the downside - stronger CZK exchange rate and larger then expected slowdown of real economic activity.

Securitisation is not dead

FX poll 2008:

Central bank retains interest rates.

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