The CNB issues Inflation Report III/2009

At its meeting on 13 August 2009, the Bank Board of the Czech National Bank approved this year’s third Inflation Report, which is one of the core elements of the central bank’s communication with the public in the inflation-targeting regime. An important part of this quarterly document is a forecast for the Czech economy, representing a key input for monetary policy decision-making. The inflation forecast and the assumptions underlying it are published with the aim of making monetary policy as transparent, comprehensible, predictable and therefore credible as possible. The CNB submits the Inflation Report to the Chamber of Deputies of the Czech Parliament twice a year for review. The current report is based on information available as of 24 July 2009.

The forecast described in this report expects inflation to continue to fall in 2009 Q3. It will remain low but positive for the rest of this year and at the start of 2010. Inflation will start rising again next year and will reach the 2% inflation target at the end of 2010. The economic decline bottomed out in Q2 and the Czech economy is expected to show quarter-on-quarter growth as from 2009 Q3. However, the sharp fall in GDP observed at the start of the year will pass through to a year-on-year decline in GDP for the remainder of the year. The Czech economy is expected to decline by almost 4% in 2009 but should return to moderate growth in 2010. The nominal exchange rate of the koruna is modestly appreciating over the forecast horizon. Consistent with the forecast is a decline in market interest rates this year followed by a gradual rise from 2010 H2 onwards.

• Full text (pdf, 3,6 MB)
• Tables (xls)
• Charts (xls)
• CNB current forecast

Selected macroeconomic indicators

*CNB's estimate