Analysts Forecast CNB Will Raise Interest Rates in February

Prague, Dec 17 (CTK) – The Bank Board of the Czech National Bank (CNB) will leave interest rates on hold at its last policy meeting this year on Thursday, analysts addressed by CTK have said, adding the CNB will raise rates at a meeting in February.


Some say, however, that a rate hike in December cannot be ruled out, expecting a very narrow vote.


The governing board will vote for no rate adjustment, but by a very narrow majority, said Cyrrus chief analyst Lukas Kovanda.


According to UniCredit Bank main economist Pavel Sobisek, the Bank Board will vote on a rate hike by 25 basis points. “Still, however, I think a majority of (Bank Board) members will be in favour of no rate changes. Such scenario is in line with the forecast the CNB published in November where the rates were lifted for the last time,” said Sobisek.


February is more suitable for a rate hike, said ING chief economist Jakub Seidler. The Bank Board will have a new macroeconomic forecast at that time.


“The latest (economic) data did not indicate any urgent need to increase rates, and monthly changes are insignificant from a point of view of the economy, so we somewhat tend to believe (the bank) will deliver a rate hike in February,” Seidler said. Raising rates in December cannot be ruled out, however, he pointed out.


Akcenta analyst Miroslav Novak holds the opinion that the CNB will increase rates early in February. The CNB delivered two rate hikes (one after another) only once, in the year 2007. The economic development is also showing only minor deviations from the CNB forecast, and so far there have been only three out of seven central bankers to make statements in favour of a rate increase in December.


The monetary policy meeting will be attended by all seven members of the Bank Board.