CNB’s 2W repo: Actual: 0.75% Consensus: 0.75% The CNB’s board decided to keep interest rates at the current record low level. All seven board members opted for stable rates. This outcome was widely expected and did not surprise anyone. CNB’s Governor Singer explicitly revealed a bias of the monetary policy as he mentioned possibility of a rate cut. The central bank did not prepare a new macro forecast. There is increasing evidence pointing to the lower GDP growth than the current CNB’s forecast. Inflation will temporarily increase above 3% at the beginning of 2012 due to changes in VAT. However, core inflation is likely to stay low and significantly below the central bank’s target. There is no pressure to tighten monetary condition. CNB’s presentation released after the meeting mentioned that the opposite can be true as risks to its forecast are skewed towards lower interest rates. On the other hand, weakening EURCZK helps to ease financial conditions. We keep our forecast that the CNB is likely to keep interest rates at the current level next 3-4 quarters.