Česká národní banka

CNB > Monetary policy > CNB Board decisions > 2017 > Statement of the Bank Board for the press conference

Statement of the Bank Board for the press conference following the extraordinary monetary policy meeting

6 Apr 2017

At its extraordinary monetary policy meeting today, the CNB Bank Board decided to end the CNB’s exchange rate commitment. The Bank Board did not discuss interest rate settings today. Interest rates thus remain unchanged at technical zero.

On the basis of a thorough assessment of the available macroeconomic data, analyses and forecasting scenarios, the Bank Board stated that the conditions for sustainable fulfilment of the 2% inflation target in the future had been met. In this situation, continuation of the exchange rate commitment is no longer necessary from the perspective of fulfilment of the CNB’s primary objective of price stability.

The overall macroeconomic picture shows that the domestic economy has been fostering rising costs and, in turn, rising prices for some time now. With anti-inflationary effects from abroad simultaneously unwinding, this means that there is no longer a need to maintain expansionary monetary conditions to the current extent. The exit from the exchange rate commitment is the first step towards a gradual moderation of the expansionary nature of the monetary conditions.

The discontinuation of the exchange rate commitment means that the koruna exchange rate will now move according to supply and demand on the foreign exchange market. As a result, it may fluctuate in either direction in the short term. The evolution of the koruna exchange rate is therefore still a significant uncertainty of the current forecast. The CNB stands ready to use its instruments to mitigate potential excessive exchange rate fluctuations if needed.