Czech maintains rate at 0.05%, FX commitment

    The central bank of the Czech Republic maintained its two-week repo rate at 0.05 percent, as expected, and repeated that it would continue to use the exchange rate as an additional tool to ease monetary policy.
    The Czech National Bank (CNB), which has prevented the koruna currency from exceeding an exchange rate of 27 to the euro since November 2013, in July pushed back the timeframe for exiting its exchange rate commitment to at least 2016.
    The CNB issued the following statement:

"The CNB Bank Board decided at its meeting today to keep interest rates unchanged. The two-week repo rate was maintained at 0.05%, the discount rate at 0.05% and the Lombard rate at 0.25%.

The CNB Bank Board also decided to continue using the exchange rate as an additional instrument for easing the monetary conditions and confirmed the CNB’s commitment to intervene on the foreign exchange market if needed to weaken the koruna so that the exchange rate of the koruna against the euro is kept close to CZK 27/EUR.

The CNB Bank Board repeated that it regards the commitment as one-sided. This means that the CNB has undertaken to prevent excessive appreciation of the koruna below CZK 27/EUR by intervening on the foreign exchange market, i.e. by selling koruna and buying foreign currency. On the weaker side of the CZK 27 level, the CNB is allowing the koruna exchange rate to float according to supply and demand on the foreign exchange market."

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