Reuters was first to report that the Czech National Bank is in a comfortable position with interest rates and it can tighten policy further at a more moderate pace, and possibly consider no rate hike at its December meeting, Governor Jiri Rusnok said last Thursday. The central bank stunned markets with a 125-basis-point rate hike at its latest policy meeting on Nov. 4, its biggest since 1997, which raised the key two-week repo rate to 2.75%, as the bank aims to prevent inflationary expectations from decoupling. Rusnok’s comments – which came after local market hours and just when the emergence of a new coronavirus variant started rattling world markets – caused a sharp repricing in rates when trading started the next day.
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