Central bank board unanimously leaves interest rates unchanged.

Central bank board unanimously leaves interest rates unchanged. The Czech National Bank (CNB) Governing Board unanimously left interest rates unchanged at its latest monetary session, in line with markets’ expectations, the CNB announced on its website. Thus the basic repo rate of the bank remained at 2.5%, which is still lower than in the euro zone. Among the factors in favour of stable rates was deemed the favourable inflationary developments with the latest consumer price inflation data being significantly lower than the CNB projections and target band thanks to the falling oil prices and their level being below their long-term average, as well as due to the recently observed CZK strengthening, CNB governor Zdenek Tuma explained. Furthermore, the recent talks in the Chamber of Deputies have shown that the government is likely to postpone the entry into force of the planned indirect taxes hikes, the excise on tobacco in particular, which would have played significant upward pressure on inflation, Tuma said. In addition, the board assessed the economy’s state as favourable; still, a new forecast to be made at beginning-2007 would allow for better assessing the current developments, Tuma stated, adding that if prices developments and the CZK rate remains at the present levels, the inflation projections would have to be changed. Thus, interest rate hike is possible only at beginning of next year at the earliest. As of today, Dec 1, Jan Frait and Michaela Erbenova term of office expires and they will be replaced by Vladimir Tomsik and Mojmir Hampl.