There’s a growing group of economists predicting that the Czech Republic’s central bank could raise interest rates again. This view is being taken in the context of continuing weakness of the Czech koruna and inflationary fears. The bank is also monitoring the growing lack of employees suitable to be put to work by a wide range of companies. With labor running out, goes the thinking, the lack of fiscal barriers (like normal interest rates) is allowing employers to overpay their workers without requiring wage growth to be based upon unified policies (such as a non-government level). Since the CNB raised rates last month, the exchange rate strengthened from 25.94 to roughly CZK 25.63 per euro. The bank has been counting on an average exchange rate for the year of 25 CZK per euro. The CNB’s rates council meets on Thursday.
