Czech central bank likely to slow rate cut pace, poll shows
reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/cb-polls?RIC=CZCBIR%3DECI poll data
Rate decision due Aug 1 at 2:30 p.m. (1230 GMT)
Governor to comment on decision at 3:45 p.m.
All analysts in poll see 25-bp rate cut
Median forecast sees main rate at 3.75% at end-2024 (pvs 4.00%)
By Jason Hovet
PRAGUE, July 26 (Reuters) -The Czech National Bank (CNB) is widely expected to slow the pace of interest rate cuts next week, opting for caution with inflation risks still in view and the crown weaker than expected, a Reuters poll showed.
The central bank has reduced interest rates by 225 basis points since last December, including four straight 50-basis-point cuts to take the main two-week repo rate CZCBIR=ECI to 4.75%.
It signalled a likely slowdown in its monetary policy easing pace after the last meeting in June, but below-forecast inflation data since then has raised some bets it might continue cutting in the same gear when it meets on Aug. 1.
Most central banker comments, though, have shown a lower probability of another above-standard cut.
In a Reuters poll, all 13 analysts forecast the CNB will deliver a 25-bp cut next Thursday. A majority said the bank would likely keep that pace the rest of the year.
"It should slow down its interest rate cuts this time with regard to the crown. Even the big central banks are not rushing into monetary easing," Banka Creditas chief economist Petr Dufek said.
The crown is 1.7% weaker against the euro since the last policy meeting in June. Before that it was trading at stronger than expected levels but is now 1% weaker than assumed in the central bank's latest outlook.
At the same time, the European Central Bank and U.S. Federal Reserve have been slow to get their own easing cycles going.
The Czech economy is also showing recovery, with consumer demand returning after the inflation surge of recent years hit households. Wage demands are something policymakers are watching.
Preliminary gross domestic product data next week before the bank's meeting should give an updated economic picture. The CNB is also due to update its own forecasts.
Inflation is back at the bank's 2% target and has been forecast to stay below 3% this year, the upper end of the tolerance band.
The crown extended falls to multi-month lows this week after central bank Vice-Governor Jan Frait said in an interview with Bloomberg News that a 50-bp point cut could not be ruled out.
But policymaker Tomas Holub told daily E15 that the bank was near a point to slow cuts and said an outlook of 25-bp steps at the remaining four meetings this year was realistic.
The median forecast in the Reuters poll saw the repo rate at 3.75% at the end of 2024, while four of the 12 analysts who gave an outlook saw the main rate at 4.00%.
Reporting by Jason Hovet;
Editing by Emelia Sithole-Matarise
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