The Forecast

The forecast assumes stable market interest rates at the current very low level and use the exchange rate as an instrument of monetary policy by mid 2017. Then, with the forecast consistent increase in market interest rates. Return to normal monetary policy will not lead to a sudden appreciation of slightly overvalued level before starting the intervention of the Czech National Bank. The reason is, among other things, that in the meantime there is a leak weaker koruna exchange rate on the price level and other nominal variables. The Board simultaneously again concluded that the possible appreciation of the exchange rate after leaving commitment to be dampened inter alia by ensuring exchange rate risks by exporters during the commitment period, as well as the closing of koruna positions by financial investors. The Czech National Bank will also be ready to intervene in order to mitigate exchange rate fluctuations.

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