Czech cenbank should be cautious on rate cuts, IMF says

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- The Czech central bank should take a cautious approach to easing monetary policy to ensure inflation returns to target, the International Monetary Fund (IMF) said in a report published on Tuesday.

The Czech National Bank (CNB) started an interest rate-easing cycle in December with a 25-basis-point reduction that put the main repo rate at 6.75%, the first cut in more than three years, amid a backdrop of slowing inflation and a sagging economy.

"Directors agreed that maintaining a tight monetary policy stance remains appropriate to ensure inflation returns to target in a timely manner," the IMF said.

"Noting the recent policy actions, directors concurred that the central bank should adopt a cautious, data-driven approach to potential further rate cuts."

Czech consumer prices unexpectedly dropped by 0.4% in December on a fall in food costs, easing year-on-year inflation to 6.9%, the lowest since September.

(Reporting by Alan Charlish in Warsaw;
Editing by Bernadette Baum)


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