CNB cuts interest rates again

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In a surprise move, the Czech central bank slashed key interest rates across the board last Thursday - the second time in nine days. The Czech National Bank trimmed one-fourth of a point off the discount, two-week repo and Lombard rates following a government report this week that predicted a weak economy and slower-than-expected growth in 2002. Each new interest rate is an all-time low. The CNB cut the overnight discount rate for commercial bank loans to 3.25 per cent, from the 3.5 per cent set on January 22. The bank also lowered the two-week repo rate to 4.25 per cent, from 4.5 per cent, and the Lombard rate to 5.25 per cent, from 5.5 per cent.

The Czech National Bank reiterated its commitment to fight the strengthening of the Czech currency which it considers an anomaly which needs to be eliminated.

Citing economic weakness in Germany and other Czech export markets, the Prague government's finance ministry lowered its prediction for this year's national gross domestic product to 3.4 per cent. Last Thursday, in addition to the rate cuts, the CNB also set a lower forecast with a range of 2.4 per cent to 3.4 per cent.