Koruna weakness could spark interest rate hike

Koruna weakness could spark interest rate hike

Published at: 2018-05-29 10:01 | Author: CIJEurope.com
The Czech koruna strengthened slightly against the euro at the beginning of the week, but lost ground on the US dollar thanks to political uncertainty in Italy, according to Next Finance's Vladimir Pikora. "The koruna fell to CZK 22.17 per dollar. It hasn't been that weak since July 2017," he told the Czech News Agency. CTK notes that the market didn't even react to a statement by the Czech National Bank governor Jiří Rusnok in which he predicted that the Czech currency would strengthen over the coming weeks. Rusnok hinted that the bank might raise interest rates if this didn't happen. František Táborský, an analyst at Raiffeisenbank, writes on the server kurzy.cz that he expects the central bank to use the weak koruna to raise rates. He writes that with rates at such low levels, central banks will have trouble reacting to the next economic downturn and that they will likely take advantage of any opportunity to raise rates before this occurs.

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