7th November 2016

Czech National Bank: Real GDP growth at 2.8% in 2016, and 2.9% in 2017,2018, exchange rate regime to end in mid-2017

On 3 November, the Czech National Bank announced inflation, GDP and interest rates forecast. The annual consumer price inflation in Q4 2017 and Q4 2018 should reach 2.3% and 2.4%, respectively.  The annual growth of real GDP is expected at 2.8% in 2016 and 2.9% both in 2017 and 2018  Compared to the previous forecast, the outlooks for headline and monetary policy-relevant inflation are slightly lower. The forecast for Czech economic growth this year has been revised slightly upwards. By contrast, the economic growth forecast for the next two years has been lowered marginally owing to a worse outlook for external demand and weaker growth in private investment. The rise in interest rates after the exit from the CNB’s exchange rate commitment, which the forecast continues to assume will occur in mid-2017, is slower than in the previous forecast. 

Also, at its meeting on 3 November, the CNB Bank Board decided 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. Read more (in English). Details in Czech.

Cyrrus analysts published a study that shows how the Czech crown exchange rate developed over the past years. Cyrrus says that the exit from the fixed exchange rate regime (planned for mid-2017) could mean losses for investors, but also cheaper holiday and shopping for Czech consumers.

Members of the American Chamber of Commerce in the Czech Republic