Czech Central Bank Warns About Rising Inflation

Czech November inflation which brought price growth to 1.5 percent, the highest level since June 2013, is a pro-inflationary risk to the bank’s current forecast, the bank said.

The central bank’s forecasts, a key driver for the expected timing for the bank to exit its weak-exchange rate policy, saw November year-on-year inflation at just 1.0 percent. It sees inflation returning to the bank’s 2 percent target in the third quarter next year.

The bank said the November price jump was mainly driven by food prices, and also by core inflation.

“This indicator of core inflation reflects the positive effect of continued growth in the domestic economy and accelerating wage growth,” the bank said.

“The published figures represent an inflationary risk to the CNB’s current forecast, which assumes that the exchange rate will be used as a monetary policy instrument until mid-2017.”

The bank has pledged to keep the crown on the weak side of 27 per euro at least until the end of March next year, and forecasts exit from the regime around mid-2017.

via Kitco

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