CNB keeps interest rates unchanged, confirms its commitment to intervene

The CNB Bank Board decided at its meeting today 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 if needed to intervene on the foreign exchange market to weaken the koruna so that the exchange rate of the koruna against the euro is kept close to CZK 27/EUR.

The CNB Bank Board repeated that it regards the commitment as one-sided. This means that the CNB has undertaken to prevent excessive appreciation of the koruna below CZK 27/EUR by intervening on the foreign exchange market, i.e. by selling koruna and buying foreign currency. On the weaker side of the CZK 27 level, the CNB is allowing the koruna exchange rate to float according to supply and demand on the foreign exchange market.

More information on the CNB’s exchange rate commitment can be found on the CNB website (https://www.cnb.cz/en/faq/Exit-from-the-exchange-rate-commitment-00001/).

The history of the settings of the main instruments of monetary policy and the Bank Board minutes are available at
https://www.cnb.cz/en/monetary-policy/instruments/#mpi http://www.cnb.cz/en/monetary_policy/bank_board_minutes/index.htm

Repo rate: The CNB’s key monetary policy rate, paid on commercial banks’ excess liquidity as withdrawn by the CNB in two-week repo tenders.

Discount rate: A monetary policy rate which as a rule represents the floor for short-term money market interest rates. The CNB applies it to the excess liquidity which banks deposit with the CNB overnight under the deposit facility.

Lombard rate: A monetary policy interest rate which provides a ceiling for short-term interest rates on the money market. The CNB applies it to the liquidity which it provides to banks overnight under the lending facility.

Marek Petruš, CNB Spokesman