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| Czech economic highlights of a probably overheated 2017 |
| Prag, 01.01.2018 |
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| A booming economy on the back of higher wages, more people in jobs, and strong exports – fuelled largely by the auto sector - and hardly dimmed by the end of the low crown and resurrection of interest rates as a central bank weapon. That was the big economic picture of the Czech economy in 2017 with the foot on the pedal likely to be lifted just slightly over the coming 12 months.
End of low crown without soar away currency
The macroeconomic event of 2017 came on April 6. It was hardly a bolt from the blue but was perhaps a bit earlier than some had been expecting - the Czech National Bank announced that it was effectively ending its low crown policy that had been in place for the last three-and-a-half years. During that period the bank had pledged to prevent the crown strengthening beyond 27 crowns to the euro. The move was a bid to head off deflation and recognition of the fact that after successive interest rate cuts bringing rates to near zero, other tools needed to be used.
Switzerland had undertaken a similar move of ending its cap in 2015, a surprise step which resulted in the Swiss franc immediately soaring and damaging many exporters. The Czech central bank said it had learnt that lesson and warned that it could continue with ad hoc interventions if the crown strengthened too much. The crown did appreciate against the euro immediately and over the long term, but not that dramatically. At its peak, the crown rose to around 25.4 crowns/euro but for much of the last eight months has been hovering just above 26 crowns/euro.
With foreign exchange interventions largely discarded, the central bank has started using interest rates again to pump prime the booming Czech economy. Two interest rate rises have taken place, both of 0.25 percentage points, starting in August and continuing in November. The benchmark interest rate is now 0.5 percent but further rate hikes are expected in 2018.
odkaz na stránku |
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Address : Euro-Brew Ltd., Hlboká 22, 917 01 Trnava, Slovakia
Tel. : +421 33 53 418 53, Fax : +421 33 53 418 52, E-mail : info@eurobrew.sk |
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