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Bloomberg
Czech policy makers raised borrowing costs for the third time in six months to cool one of Europe’s fastest-growing economies and unveiled a hotly anticipated outlook predicting a surge in the currency.
The Czech National Bank’s board voted unanimously to increase the benchmark interest rate a quarter point to 0.75 percent, Governor Jiri Rusnok said. The fresh forecasts, which included the bank’s first projection on the currency since it slapped a now-defunct cap on gains in 2013, see the koruna appreciating almost 3 percent per euro on average through 2019. The koruna jumped on the news, but quickly erased most of its
gains after policy makers signalled only one more rate increase was likely this year.
“The forecast sees room for one more interest-rate this year, but even that’s conditional on the other circumstances and on the development of the overall macroeconomic situation, especially, of course, the exchange rate,†said Rusnok.