The Czech National Bank’ governor Jiří Rusnok says that reducing interest rates to zero or below zero from its current perch at 0.25 percent could disrupt the stability of the financial system. He warned that undermining the income of Czech banks would be unhelpful for the financial sector. Kurzy.cz says that in central bank speak, this is a rather strong statement and that if the bank actually did reduce the rate, it would have a great deal of explaining to do. After all, it would have to be something worth risking the stability of the financial sector over. But the website writes that on balance, it’s positive news in that it suggests that the governor doesn’t see any need for a dangerous loosening of its monetary policy. The central bank is expecting an 8 percent decline in economic activity this year.
