Most Czech central bank board members see less of a chance that monetary conditions will need to be relaxed further, minutes from the Feb. 6 rate meeting showed today.
The Ceska Narodni Banka last week left the benchmark two-week repurchase rate at 0.05 percent, almost three-quarters of a percentage point less than the euro-area benchmark.
“A majority of board members viewed the likelihood of the need to further ease the monetary conditions as smaller given the persisting weak exchange rate of the koruna at the forecast horizon compared to the situation at the turn of the year,” the minutes said. “It was also said several times that new economic data might change this view in the months ahead and the likelihood of the need for monetary easing may rise again.”
The central bank is aiming to prevent inflation from undershooting its target range of 1 percent to 3 percent as the economy suffers in the longest recession on record. Gross domestic product shrank for a fourth consecutive quarter in the final three months of last year, with households and businesses curbing spending as government pursues austerity policies and the euro-area crisis curbs demand for exports.
The koruna strengthened after last week’s policy meeting, gaining 1.8 percent to the euro, its best weekly rally in 14 months. Since then it has weakened, falling 0.6 percent against the euro this week to trade at 25.377 as of 8:38 a.m. in Prague.
The minutes don’t disclose the views of individual board members.