(Bloomberg) -- The Czech economy is facing some “mildly anti-inflationary” risks that should allow more aggressive monetary easing by the central bank in the remainder of this year, according to policymaker Tomas Holub.
The outlook for inflation and the economy running below its potential are among reasons for accelerating rate cuts, Holub said in a presentation posted on the central bank’s website on Wednesday. Demand for Czech exports is weak, while easing by the European Central Bank and the US Federal Reserve limits the risk of a major koruna depreciation, he said.
Policymakers in Prague have slashed the benchmark rate by 275 basis points since December, but slowed the pace of easing to quarter-point reductions at the last two meetings. Holub was the sole central banker voting for a half-point rate cut last month.
“Fine-tuning based on incoming data isn’t merited in the current situation given the transmission lag,” Holub said. “The negative effects of monetary policy being potentially too tight would materialize in lower economic growth and inflation moving below the target.”
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