By Leos Rousek (Dow Jones Newswires, 12.12.2011)
The Czech central bank, or CNB, should keep its record loose interest rates steady to help the economy stay anchored as it navigates through rough waters, Pavel Rezabek, a CNB monetary policy board member, said Monday.
"We shouldn't introduce unexpected shockwaves to the currently very difficult [economic] situation," Rezabek told Dow Jones Newswires in an interview on the sidelines of the bank's event to unveil a new memorial coin.
Rezabek said that by unexpected shocks he meant changing interest rates in either direction.
CNB is due to hold its final policy meeting on Dec. 21 and Rezabek is one of seven rate setters scheduled to vote.
The bank has kept its headline two-week repurchase agreement rate unchanged at a record low of 0.75% since May 2010.
Rezabek has regularly advocated interest stability since last year.
Moreover Rezabek dismissed calls, also voiced by some of his board colleagues, for tightening the monetary policy if the Czech koruna continues to weaken.
"The currency weakening alone isn't an impetus for interest rate tightening," Rezabek said.
CNB is studying the exchange rate's impact on inflation levels.
Although inflation at 2.5% in November was 0.5 percentage point above the CNB forecast, it is mostly driven by anticipated increases of regulated prices and higher sales taxes.
"We have to study reasons behind the inflation reading," he said, adding they don't warrant the monetary policy tightening.
Late morning Monday, the koruna traded at 25.57 to the euro, weaker from 25.51 late Friday and out of its range between 24.00 and 24.80 where it moved in the first three quarters of the year.