Czech central bank holds rates, keeps currency limit in place

The last reliably dull monetary policy meeting in Prague has wrapped up with a decision to keep interest rates on hold at very close to zero, and to leave the upper limit on the koruna in place. The next decision could very well be a different story.

With inflation rising (thanks in part to potatoes), the Czech National Bank is under intense pressure to scrap its limit on the koruna. Currently, it buys euros to prevent the neighbouring common currency from trading under CZK27.

The pace of speculators rushing in to predict that limit will snap has been accelerating hugely of late, even though the official guidance is that the exchange rate floor will be in place until around the middle of the year. Some think the floor will buckle as soon as April. As a reminder, it is now March 30.

The central bank’s statement is here.