PRAGUE, Sept 26 (Reuters) - The Czech National Bank raised interest rates at a third straight meeting on Wednesday as it battles fast-rising wages and building inflationary pressures in the domestic economy.
The seven-member board voted to increase the two-week repo rate by 25 basis points to 1.50 percent on Wednesday. Markets expected the move and focus will now turn to the bank’s outlook for further tightening.
Governor Jiri Rusnok told Reuters this month two rate hikes before the end of the year was a “strong scenario”. The increase on Wednesday marked the first time in more than two decades it has raised rates at three consecutive meetings.
Forward rate agreements are pricing in chances the bank will deliver another hike this year. All 13 analysts in a Reuters poll expected Wednesday’s increase and a majority forecast one more rise after that.
The central bank, which became the first in the European Union last year to begin normalising policy after years of loose measures, has moved faster to tighten rates this year than expected from its earlier outlooks, which had seen crown currency firming helping its policy.
Instead, the crown has been weakened by emerging-market selling pressure.
The latest economic data have shown growth remains strong and on course to grow at least 3 percent this year.
Wages continue to rise at their fastest pace in 15 years and inflation has been above the bank’s 2 percent target for all but three months since the beginning of 2017.
Rusnok will comment on the board’s decision and risks to the bank’s current macroeconomic forecasts at a press conference at 2:15 pm local time (12:15 GMT). (Reporting by Robert Muller and Jason Hovet, editing by Michael Kahn)