The Czech National Bank (ČNB) will likely keep its forex intervention in place until the middle of next year or even as long as 2016, analysts told the Czech News Agency (ČTK). The national bank initially said it planned to end the intervention at the beginning of next year, but at a policy meeting at the end of June, ČNB officials said they planned to keep the Czech crown weak until at least the second quarter of 2015. The bank introduced its forex interventions last November in a move to combat deflation. The ČNB board is scheduled to discuss the matter at a meeting on Thursday, when it unveils a new macroeconomic forecast.
“However, no significant changes are expected against the previous forecast. Slower return of inflation to the inflation target will probably be taken into account, but the forecast for faster growth of the domestic economy will also be raised,” Miroslav Novák, an analyst at Akcenta, told ČTK. “The impact of November’s intervention will get exhausted in the second half of this year. The result will be that the domestic economy will need further monetary policy easing. But the ČNB will not set a new intervention level as it did last year in November. Through verbal interventions, the ČNB will weaken the crown further to the level of CZK 28 against the euro or more.”
