Czech Central Bank Ready to Use Koruna, Singer Tells Hospodarske

The Czech central bank may use a weaker koruna to ease monetary conditions, boost exports and counter deflation risks, Governor Miroslav Singer said.

In the case of a “real” need, the “easiest” solution would be a currency intervention, Singer said in an interview published today in Hospodarske Noviny. Weakening the koruna would be a “logical” step in a country, where exports equal 80 percent of economic output, he said.

The Czech central bank cut interest rates to a record-low 0.25 percent on Sept. 27 amid an economic recession. Five central bank board members voted to reduce the benchmark two- week repurchase rate by a quarter-point. They also discussed which policy tools may be used to ease conditions more than would be accomplished by another rate reduction.

“If we had a feeling that there are long-term deflationary risks, the most obvious way of how to counter them is via currency weakening,” Singer told Hospodarske Noviny, adding he was “satisfied” with the last rate cut.

To contact the reporter on this story: Lenka Ponikelska in Prague at lponikelska1@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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