The forex interventions policy launched by the Czech National Bank in November 2013 as an instrument for maintaining monetary stability could soon be a thing of the past. Economists predict the central bank could decide to end interventions as early as the beginning of April, Daniela Lazarova of Radio Praha spoke to David Marek, chief economist with the consultancy Deloitte, about the likelihood of such a move and its immediate impact on the economy.
“We know for sure that the current intervention regime of the Czech central bank should change sometime during the second quarter of this year, however now we can expect that it will be sooner rather than later. There is no reason to continue with the forex interventions, the inflation is above the bank’s inflation target and there are strong forces building against the central bank on the foreign exchange market. If the intervention policy were to continue these forces would get even stronger and the volume of interventions, which has increased, would get higher and higher. This is a potential source of future losses of the central bank so there are strong reasons to quit the forex intervention regime sooner.”
View the interview.