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Czech Central Banker Janacek Doesn’t See Imminent Policy Easing

Dec. 11 (Bloomberg) -- Further Czech central bank policy easing through koruna sales doesn’t appear imminent, board member Kamil Janacek said.

Janacek commented on economic developments and monetary policy outlook in an interview in Prague.


“Demand inflation pressures from the domestic economy are non-existent at present. For us, the main inflation threat would be a continued increase in agriculture commodities on world markets.

‘‘It’s quite evident that domestic demand, with a high probability, won’t represent an inflation threat in the next three or four quarters.

‘‘We cut the policy rates three times this year, which was followed by a decline in market interest rates. Interest rates for corporate loans and mortgages are at historic lows. The second dimension of our policy decisions was the psychological effect. This means a signal that the central bank, within its mandate of price stability, will try to improve economic conditions.

‘‘We are expecting a further slight decline in market interest rates, even though the policy rate is effectively zero. It has been said already that we will be ready to use other instruments to achieve our goal.

‘‘I consider the foreign-exchange channel to be a standard policy tool, and I won’t have a problem if we use it, should the economic situation require further easing of monetary conditions. I believe that we will be ready to intervene if it’s needed.

‘‘But right now, I’m in a wait-and-see position, and a further relaxation of monetary policy does not look imminent. I have to wait and analyze the situation, inflation trends in the first quarter of next year will be an important factor in this respect.’’


‘‘Net exports were the only factor slowing the decline in economic activity in the first three quarter of the year. The development of foreign demand for Czech exports will be very important for future performance of our economy.

‘‘We expect trends in the domestic economy from this year to continue next year, especially in the first half. We forecast that there will be a shift from stagnation, or a slight recession, visible in the first half of the year, into a recovery of growth in the second half of 2013.

‘‘This expectation is based on these three key preconditions: that a recovery will occur in our main trading partners; that households will cease to defer consumption and will somewhat reduce the rate of their savings; and that companies will start to invest.

‘‘I think that when we see some improvement in overall economic situation, an improvement in perception among people and businesses will follow. The Czech economy, especially when compared with some other EU countries, is in a much better shape than how it’s perceived by the public and the corporate sector.’’

To contact the reporter on this story: Peter Laca in Prague at

To contact the editor responsible for this story: Balazs Penz at

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