Central bank rates should rise: Czech

PRAGUE: Czech interest rates should stay unchanged for now and rise before the end of 2012 as an early recovery in the euro zone filters through to the Czech economy via higher exports, bolstering overall growth, a central banker said.

The bank's seven-strong governing board has kept the key two-week repo rate at an all-time low of 0.75 percent since May 2010 as it aims to balance out a spike in inflation caused mainly by a tax hike and partly by higher commodity prices, and a shrinking economy.

In an interview with Reuters cleared for publication on Wednesday, Kamil Janacek said Czech growth could already be recovering thanks to rising demand for the country's goods from its main trading partners in the euro zone, after the second Greek aid package and the European Central Bank's liquidity injections calmed markets. This will eventually warrant a policy tightening in the Czech Republic, Janacek said.

Copyright Reuters, 2012