PRAGUE, Aug 6 (Reuters) - The following are selected
comments by Czech central bank (CNB) Governor Zdenek Tuma at a
news conference on Thursday.
The CNB cut interest rates by a quarter of a percentage
point to a new low of 1.25 percent, surprising some in the
market who had expected stable policy.
Eleven out of 20 analysts polled by Reuters had expected no
rate move, and the rest had forecast the cut.
For a news report on the decision, click on [].
ON INFLATION FORECAST
"The outcome of the new forecast is that the inflation
outlook is lower for the nearest quarters which are relevant for
making monetary policy decisions.
"We expect inflation to drop further in the course of this
year, and during next year it will gradually approach the target
of 2 percent."
ON THE ECONOMIC DECLINE
"The economic development behind the forecast has not
changed fundamentally compared with the previous forecast, but
we are getting lower trajectories.
"We assume that the Czech economy has already shrunk, mainly
in the first quarter of this year.
"The decline reached the bottom in the second quarter and
later we expect a very gradual recovery. We will however keep
seeing quite poor numbers across the economy in year-on-year
figures."
"But in month-on-month or quarter-on-quarter numbers, the
situation should already look better."
ON CROWN, MARKET INTEREST RATES
"We assume in the forecast that (the crown) will slowly
appreciate over the forecast horizon.
"We expect (market interest rates) will remain at low
levels, they will drop a little more this year, and return to
growth during 2010, mainly in the second half."
"In the external environment... this time it is apparent,
that the development is in the anti-inflationary direction in
all the key parametres.
"There is, on the contrary, a change toward higher values
for oil. Oil is a certain pro-inflationary factor."
IS THIS THE BOTTOM?
"This is a valid (question) and it is not the first time we
have talked about it here... Where is the bottom for interest
rates? The bottom is zero. So we still have room to manoeuvre."
"Despite (the fact) there has been a change in sentiment and
there is certain optimism.... that still does not mean that the
recession (cannot) be longer or that the decline (cannot) be
deeper than expected."
"In such a case... the Czech central bank still has 1.25
percentage points room to manoeuvre."
ON HOUSEHOLD DEMAND:
"We expect that it will be slowing down in the rest of 2009
and can even drop into negative levels in 2010, that was a
subject of debate today."
"Behind this is a drop in households' disposable income and
growing unemployment."
"On the other hand there were arguments that there has been
a decline in the population's savings level and that people may
have the tendency to keep consumption at a certain level."
ON INTEREST RATE DIFFERENTIAL WITH EURO ZONE
"A decline in interest rates in 2009 is consistent with the
forecast, and then a certain rise, mainly in the second half of
2010."
"Although we are counting on that, the positive interest
rate differential will be closing."
"Nevertheless, even when we swing back into a negative
interest differential, which should happen in 2010, we are
counting that it will not have any fundamental impact on the
exchange rate."
(Reporting by Jan Lopatka and Martin Dokoupil; Editing by
Michael Winfrey)
