2017.06.2907:18:00UTC+00Czech Central Bank Holds Rate Steady

The Czech central bank kept its key interest rate unchanged on Thursday for a second consecutive session since abandoning a three-and-a-half-year long ceiling on the appreciation of the koruna in May.

The Czech National Bank Board left the benchmark two-week repo rate unchanged at 0.05 percent, in line with economists' expectations.

The discount rate was held at 0.05 percent and the lombard rate at 0.25 percent.

On April 6, the bank ended the koruna's peg to the euro that was in place since November 2013, thus allowing the currency to appreciate.

"Today's post-meeting press statement and conference should provide some hints about when the MPC might start to raise interest rates," Capital Economics economist Liam Carson said.

"As things stand, we think the MPC meeting on 3rd August is the most probable date for the first hike."

In May, headline inflation accelerated to 2.4 percent and the core figure climbed to 2.5 percent, well above the bank's 2 percent target.

Carson pointed out that both wages and credit are growing at the fastest pace since the global financial crisis and policymakers have also voiced concerns about the pace of property price rises.

While some policymakers including the Governor Jiri Rusnok said that a strengthening of the koruna could delay a rate hike, the appreciation of the koruna since the removal of the currency peg has been gradual, the economist noted.

Capital Economics expect the policy rate to be hiked to 1.00 percent by the end of 2018.