Cutting the 2W repo rate

At its meeting today, the CNB Board decided to cut its limit two-week repurchase rate from the current 15% to 14.5%, effective July 17, 1998. The change in the interest rate conforms to the expected development of inflation which is directed at maintaining the CNB's medium-term target as well as the target for this year. The gradual lowering of the inflation rate is a result of earlier adopted economic policies, including monetary restriction, which led to a slowdown in domestic demand, improvement in the relationship between wage development and the productivity of labour and also moderation of the external imbalance. The CNB expects these positive trends to continue and is ready to respond to them adequately. Conversely, should the present positive external conditions worsen significantly or should a more principal change in fiscal policy occur, further tightening of monetary policy would be required.

CNB - M. Švehla