(Reuters, 20.5.2009)
The Czech economy has likely seen its worst performance in the first quarter of this year, central bank Vice-Governor Mojmir Hampl said on Wednesday. Speaking on the sidelines of a financial seminar in Bucharest, Hampl also said the bank would do anything it can to ensure inflation remained on target this year.
"Our predictions are based on an assumption that the worst in terms of the economy happened in the first quarter but, of course, uncertainty remains high and the bad news flow is not disappearing," Hampl said.
On currency issues, Hampl said:"We are happy that the high volatility on the Czech crown has stabilised a bit. And we hope that now we are approaching a more standard state of affairs," Hampl told reporters.
Vice-Gov Hampl says economy has bottomed out
Happy crown rate stabilised
Prices under control
The Czech economy probably experienced the worst of its downturn in the first quarter of this year and the crown exchange rate is stabilising, central bank's Vice-Governor Mojmir Hampl said on Wednesday.
The Czech economy has been severely hit by a faltering demand in the euro zone, its main trading partner. Gross domestic product dropped by 3.4 percent year-on-year in the first quarter.
Speaking on the sidelines of a financial seminar in Bucharest, Hampl said the worst was over but uncertainty remained high.
"Our predictions are based on an assumption that the worst in terms of the economy happened in the first quarter but, of course, uncertainty remains high and the bad news flow is not disappearing," Hampl said.
The economy has started to show signs the pace of the downturn is easing, with exports falling by 6.3 percent year-on-year in March after double-digit falls in the previous two months.
The bank's Governor Zdenek Tuma said on May 7, after the bank trimmed the main rate by 25 basis points to a record low 1.50 percent, that the worst effects of the financial crisis on the economy had already passed.
The central bank expects the economy to contract 2.4 percent this year and grow by 1.4 percent in 2010.
CROWN, PRICES
The crown currency, closely watched by Czech policy makers because of its big influence on inflation in the export-reliant country, tracked wide swings of other central European currencies earlier this year but stabilised in past months as risk aversion towards the region eased, settling into a range of 26.400 to 26.900 per euro.
"We are happy that the high volatility on the Czech crown has stabilised a bit. And we hope that now we are approaching a more standard state of affairs," Hampl told reporters in the Romanian capital.
Czech central bank targets consumer inflation at 3 percent with a tolerance band of 1 percentage point either side. It aims to switch to a 2 percent target as of 2010.
Hampl told reporters in Bucharest he "strongly" believed inflation would be on target at the end of the year.
April data showed consumer inflation up 1.8 percent year on year. The bank forecasts inflation at 1.1 percent a year from now.