• 722 days Will The ECB Continue To Hike Rates?
  • 722 days Forbes: Aramco Remains Largest Company In The Middle East
  • 724 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 1,124 days Could Crypto Overtake Traditional Investment?
  • 1,129 days Americans Still Quitting Jobs At Record Pace
  • 1,131 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 1,134 days Is The Dollar Too Strong?
  • 1,134 days Big Tech Disappoints Investors on Earnings Calls
  • 1,135 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 1,136 days China Is Quietly Trying To Distance Itself From Russia
  • 1,137 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 1,141 days Crypto Investors Won Big In 2021
  • 1,141 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 1,142 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 1,144 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 1,145 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 1,148 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 1,149 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 1,149 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 1,151 days Are NFTs About To Take Over Gaming?
Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

Billionaires Are Pushing Art To New Limits

Billionaires Are Pushing Art To New Limits

Welcome to Art Basel: The…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

  1. Home
  2. Markets
  3. Other

With Growth Slackening, Czech Central Bank Eases

As anticipated (see Daily Global Commentary, July 30: "Surging Central European Currencies: Running Out of Steam?"), the Czech central bank switched to easing mode yesterday, lowering its key repo rate by 25bps to 3.50% - the first actual cut in over four years. Governor Tuma noted that the Czech economy is in a "declining phase" and that a "bigger dampening" is now expected. The bank also lowered its GDP growth forecasts to 4.1% this year (prev. 4.7%) and 3.6% in 2009 (prev. 4.0%). Tuma also warned that he could not exclude another rate cut this year. The vote by the six-member policy board reportedly was unanimous.

Although July inflation picked up again, with annual CPI at 6.9% (6.7% in June), other data releases today confirmed the picture of a slowing economy. Industrial output rose just 2.2% on the year in June (3.4% in May), while the rate of unemployment accelerated to 5.3% in July from 5.0% in June. Last week, the Markit survey reported that the manufacturing sector PMI for July dropped to 49.9, down from 50.7 in June - the first time the index has slipped below the growth-contraction level of 50.0 in over five years.

It remains to be seen whether this week's easing will be the first in a series for the Czechs, and neighboring Hungary and Poland are unlikely to switch to easing mode before Q4. However, any weakening in the crown over Q3 will likely not be enough to counter the economic slowdown heading into 2009. With a focus on the outlook 12-18 months ahead, the Czech central bank is likely to cut at least once more before the year is out.

 

Back to homepage

Leave a comment

Leave a comment