Rate Cut Surprises Markets

June 2005
Emerging Europe Monitor: Central Europe & Baltic States;Jun2005, Vol. 12 Issue 6, p7
Country Report
Country Report
The article reports that the Czech National Bank (CNB) has its two-week repossessed rate by 25 basis points to 1.75% in April 2005, as a response to reduced inflation forecasts in 2006. Explaining the decision, which took most analysts and markets by surprise, central bank Governor Zdenek Tuma claimed that lower inflation expectations, especially in relation to import prices, justified the cuts. The central bank is expected to hold interest rates at their current level for the remainder of the year, before beginning a steady hike at the start of 2006.


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