Rates Already In Contractionary Territory, Koruna Appreciation Desirable, CNB Gov Says

Czech News Agency CTK runs a summary of comments from CNB Governor Michl who spoke at a seminar in Brno:

• Michl told the audience that Czechia's base interest rate is already at a level that dampens economic activity and further rate hikes would merely deepen the economic recession. The CNB paused its rate-hike cycle in June when the policy rate reached 7%.
• This reinforces the view that interest rates will remain on hold for now, after hawkish outgoing MPC member Mora told Seznam Zpravy that he did not expect the CNB to raise interest rates during his last two meetings in December and February.
• Michl flagged the need for interest rates to remain higher for longer in order to induce households and businesses to increase savings, which would reduce inflation and create capital for investment.
• The Governor said he would like the Koruna to resume appreciation versus the euro. The CNB currently expects EUR/CZK to average at CZK24.37 next year.