Connect with us

Popular World News

Czech rate hikes over for now as ECB, Fed turn to easing; next move unclear: Reuters poll By Reuters

Czech rate hikes over for now as ECB, Fed turn to easing; next move unclear: Reuters poll By Reuters


Czech rate hikes over for now as ECB, Fed turn to easing; next move unclear: Reuters poll By Reuters


PRAGUE (Reuters) – The Czech central bank will likely keep interest rates on hold for the rest of 2019 and probably through 2020 as the ECB and the U.S. Fed embark on looser policies, a Reuters poll of analysts suggested on Monday.

All 13 analysts interviewed in the poll forecast the Czech National Bank (CNB) would make no change to the key two-week repo rate – which stands now at 2.00% after eight hikes since 2017, the last coming in May – when it next meets on Aug. 1.

The bank has said a pause in policy moves could last until mid-2020 as it balances a still solid domestic economy with signs of weakness from the euro zone, global trade tensions and uncertainties over Britain’s divorce from the European Union.

But it has given no firm commitment on a date or any clear indication what its next move might be after the lull.

Seven analysts forecast stability through 2020.

Two expected a hike next year in the second or third quarter while another three saw a cut, coming in either the first or third quarter of 2020. One analyst did not give an outlook.

Another three analysts said rate hikes would continue but not until 2021.

Markets, through forward rate agreements, are pricing in a chance of rate cut by the end of 2019.

“Given the ongoing foreign uncertainties, ‘wait-and-see’ for forthcoming quarters seems the most likely scenario,” ING analysts said in a report.

The Czech economy has stayed buoyant in the face of softness in the euro zone, particularly in key trading partner Germany.

Unemployment is low and wage growth strong historically, keeping price pressures up. Headline inflation was at 2.7% in June, in the upper range of the bank’s tolerance band around a 2% target.

But the export-reliant economy is highly tuned to the car sector and conditions abroad.

The ECB laid the groundwork for policy easing at a meeting last week and markets widely expect the Fed to cut rates this week for the first time since the depths of the financial crisis more than a decade ago.

Czech central bank Vice-Governor Tomas Nidetzky told Reuters last week that rate stability, as seen by the bank’s own outlook, was still the most likely scenario and that the bank did not automatically have to follow the ECB or Fed.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.


Source link

Continue Reading
You may also like...
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *


To Top
error: Content is protected !!