(Bloomberg) -- Czech policymakers are likely to lower interest rates for a seventh meeting as receding domestic inflationary risks and concerns over the global economic outlook boost the case for further monetary easing.
After a cumulative 250 basis points of cuts since December, the Czech National Bank will lower its benchmark by another quarter of a percentage point to 4.25% on Wednesday, according to 24 out of 25 economists in a Bloomberg survey. One respondent expects no change in rates.
The central bank is scheduled to publish its policy decision at 2:30 p.m. in Prague, followed by Governor Ales Michl’s press briefing at 3:45 p.m.
Weakening demand for exports, slower-than-expected domestic wage growth and a more dovish outlook for US and euro-area monetary conditions have all recently boosted the case for more Czech rate cuts.
“We now see the probability of a pause in the monetary-easing cycle as very low,” Vit Mikusek and Martin Kron, analysts at Raiffeisenbank AS in Prague, said in a report.
While consumer price growth has held near the 2% target this year, some board members have warned about persistent pressures in services and housing two years after the worst Czech inflation crisis in decades.
Still, prospects of more interest rate cuts by the US Federal Reserves and the European Central Bank allow further monetary easing also in the Czech Republic without risking major koruna depreciation, board member Tomas Holub said last week.
The Czech currency has gained 1.2% against the euro since the Aug. 1 rate meeting, outperforming regional peers, and has been trading slightly stronger on average than the central bank had forecast for this quarter.
Money market prices imply about 75 basis points of easing in the last three policy meetings of the year, followed by more cuts in 2025.
That contrasts with the central bank’s current forecast, which implies a period of steady rates after policymakers slowed the pace of cuts to 25 basis points in August from 50 basis-point steps at each of the previous four meetings.
“One might rather expect several votes in favor of a steeper rate cut, although the majority will probably opt to stick to the current easing pace, ” Raiffeisenbank’s Mikusek and Kron said.
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