Crown's constant firming may endanger economic growth

The Czech National Bank on Wednesday released a report from its board meeting at the end of June in which it sees the constant appreciation of the crown as a factor that could cause changes in the structure of the economy and negatively affect economic growth. The crown is also one of the main factors behind the current fall of inflation below the central bank's target.

An increasing number of economists believe that the central bank will cut interest rates by up to half a percentage point at its next monetary decision-making meeting in late July, which would harmonise the domestic interest rates with the EU level.

However, the Central Bank board does not see sufficient evidence that the exchange rate had any significant impact on the competitiveness of exports, employment and wages.

The central bank attributes the strong crown largely to global developments and growing uncertainty about the US dollar.