January 17, 2020 / 11:04 PM / a month ago

Czech central bank's Rusnok: rates very likely stable -Lidove Noviny

PRAGUE, Jan 18 (Reuters) - Czech interest rates are very likely to stay stable in 2020 or rise slightly if they do move, central bank Governor Jiri Rusnok was quoted as saying on Saturday.

Rusnok told Lidove Noviny newspaper in an interview that the country’s economy could see some pickup in the second half of the year given the external outlook and said a recent inflation spike was not a surprise.

The Czech National Bank is one of the few central banks still debating if an interest rate hike is needed to tame inflationary pressures stemming from a strong labour market and wage growth. But it has held off on policy changes since last May as it balances domestic factors with weakness abroad.

Headline inflation spiked to 3.2% in December, according to data released on Monday, putting price growth outside the bank’s tolerance band around a 2% target for two months running, fuelling expectations that there could be a rate hike in 2020 and pushing the crown to a seven-year high.

“Our rates will very likely not change (this year), or they could rise slightly,” Rusnok said in the interview for Lidove Noviny’s Saturday edition.

Rusnok said inflation data would help with preparing the bank’s next macro outlook but said policy was used to react to expected development, not past.

In an interview with Ekonom weekly magazine published on Thursday, Rusnok said he saw stable rates as most likely this year and that average inflation would ease from 2019 but stay above the 2% target.

The bank has voted 5-2 to maintain the two-week repo rate at 2.00% at its last three meetings, with the minority seeking a hike.

Reporting by Jason Hovet Editing by Leslie Adler

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