March 10, 2020 / 2:02 PM / 21 days ago

UPDATE 1-Czech central bank chief: no need to cut rates now but ready to act if needed

(Adds quotes, background)

PRAGUE, March 10 (Reuters) - Czech central bank Governor Jiri Rusnok said on Tuesday he did not currently see a need to cut interest rates in response to the fallout from the spread of the coronavirus but stood ready to act should it become necessary.

Rusnok told reporters during a visit to parliament the bank could lower interest rates - currently at 2.25% after a hike last month - at its March 26 meeting if the situation demands it.

“If we come to the conclusion at the next meeting that cutting rates is something that would help, even if only psychologically, then we will do it, we don’t have any taboo,” Rusnok said.

“But from today’s perspective, it does not seem to me like something which would be needed, which could affect the situation in any significant way, especially in the short term.”

He said the bank could cut by more than 25 basis points if need be, adding that it had plenty of room to manoeuvre.

The Czech government has banned public events and ordered schools to close from Wednesday, adding to earlier measures to fight the spread of the coronavirus. The country had 41 confirmed cases as of Tuesday afternoon.

Rusnok’s colleague on the board of the central bank, Ales Michl, said earlier on Tuesday he would propose a 25 basis point cut to help companies steer through problems brought on by the spread of the virus and related measures.

The crown currency has fallen by 3.5% against the euro since hitting 7-year highs in mid-February and was trading at the weakest levels since last October on Tuesday. (Reporting by Robert Muller Writing by Jan Lopatka; Editing by Kirsten Donovan)

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