- Crown so far, domestic factors favour hike in Q3
- But continued faster appreciation could delay move
- Central bank also watching ECB
- Not planning to use interest rates to slow mortgages
The Czech central bank may put off raising interest rates to beyond the third quarter if the crown keeps strengthening at the pace seen in recent weeks, bank board member Marek Mora said, according to Reuters.
The economy is healthy and the bank has room to tighten policy in the third quarter, in line with its forecasts, although slow inflation in the euro zone remains an issue, Mora said.
But further substantial gains by the crown could compensate for that and push rate increases into the future, Mora, who joined the board in February, told Reuters in an interview on Monday.
In April, the bank dropped its cap on the value of the crown, a tool for keeping monetary conditions relaxed, after more than three years. That opened the door to a rise in interest rates, which would be the first in central Europe in the current economic cycle.
"When I take into account overall the crown's firming since the exchange rate cap, a rate increase could come in the third quarter," Mora said.
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9th January 2018