Czech central banker Holub: next rate move can go either way; FX rate may lag forecast

PRAGUE: The Czech central bank will likely keep interest rates unchanged at its coming meeting and the outlook for monetary policy is neutral with the possibility of moves in either direction in the future, central bank board member Tomas Holub said on Monday.

"I see it in the way that the outlook for monetary policy is neutral, the probability of any further changes to interest rates at the nearest meeting is quite low for me," he told reporters on the sidelines of a conference in Prague.

"I would not even indicate any direction now... We can imagine moves in both directions depending on further development."

Holub said risk aversion in markets persisted, which could keep crown weaker than the bank's already moderated forecast for the currency's firming in the coming months.

This was however being offset by other factors such as in the coming months.

"If we had such a constellation the exchange rate is somewhat weaker, wage (growth) a bit lower, then it can cancel out to a large extent. The story will simply shift, we would have a bit more inflation pressure from abroad, from import prices, but a little less for the domestic economy," he said.

The bank's board raised the main two-week repo rate by 25 basis points to 2.0pc  on May 2.