Change in rates: 2W repo rate 9.5%, discount rate 7.5%, Lombard rate 12.5%

At its meeting today the CNB Board decided to cut the CNB's two-week repo rate by 1 percentage point, ie from 10.5% to 9.5%, effective from 23 December 1998. This decision arises from expectations being confirmed for very weak inflationary pressures in the Czech economy during 1999.

At the same time the Board decided to adjust the CNB's key rates forming the corridor for the movement of the short-term price of money to the anticipated interest rate level. The Board cut the Lombard rate to 12.5% and the discount rate to 7.5% effective from 23 December 1998, ie by 2.5 percentage points for both rates.

The Board also identified potential excessive wage growth and a deepening of the trade deficit as risks for future economic development.

CNB - M. Švehla