The Czech central bank doesn’t need to cut interest rates this year as the move would have little effect on economic growth, Dow Jones reported, citing policy maker Kamil Janacek.
Households and businesses are holding back on spending as real wages fall and demand in the country’s main exports markets weakens amid Europe’s debt crisis, Janacek was quoted by the newswire as saying in an interview published today.
“The biggest barrier is a lack of domestic demand and uncertainty in the European Union, uncertainty of future demand for Czech exports,” he said. Because of this, there are “very few monetary instruments to help the economy. Quantitative easing in this situation would have no effect.”
The bank lowered its benchmark two-week repurchase rate by a quarter point to a record low of 0.5 percent on June 28. Janacek was one of three board members to vote for no change at the meeting. Four board members voted for the cut.
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