Signs of a gradual economic recovery, the improvement of the current account balance of payments and the expected relaxation of foreign monetary policy mean that the krona may be slightly weaker than fundamental indicators suggest, according to a member of the bank’s board of directors.
“This is another argument for not being afraid to cut rates when we know that the exchange rate can strengthen over time,” he said.
The Czech crown was not helped by a statement from the bank’s board member Tomas Holub that he believes it is reasonable to reduce interest rates from the current 4.75 to 4% before the end of the year.
Weak data on domestic economic growth for the second quarter of 2024, published on Tuesday, also contributed to the weakening of the crown, according to analyst Jaromir Getse from Komerční banka.
As a result, the Bank’s Board cut interest rates as expected, that is, by 25 basis points. The Czech currency responded by strengthening to 25.35 crowns per euro.
2024-08-03 18:13:34
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