On Wednesday, the Central European currencies experienced calm trading as they ignored appreciation of the US dollar against the euro as well as sharp losses of Italian and Spanish bonds.
Today’s eye-catcher was a regular meeting of the Czech National Bank´s Board dedicated to proper setting of central bank´s monetary policy. Board left the key interest rates untouched. Endogenous inflationary pressures have waned and the VAT rate hike at the beginning of this year has not stirred inflation notably. The rates have hit rock-bottom. Demand in the economy has been curbed. Real household income falls, unemployment is on the rise, and consumer confidence remains very low. Reflections regarding forex interventions that should help the CNB with meeting its 2% inflation target have returned on the agenda. Singer doesn´t see any real risks of inflationary pressures and says ČNB is still ready to use forex interventions if further monetary easing is necessary. It is possible this kind of easing might be needed by the end of the year.