The Czech National Bank raised its interest rates on Thursday, a move analysts had widely expected. The surprise came at the press conference that followed, where Governor Aleš Michl disclosed that the decision passed by a 4-3 vote on the bank board. The koruna weakened after the briefing.
A narrow split
Four board members voted for the increase and three preferred to keep rates unchanged. The article describes such a narrow split as unusual for the central bank, which more often acts unanimously or with at most one dissenting vote. Markets had already priced in the hike, so the decision itself drew no reaction in the koruna.
The divergence between investor expectations and the bank’s stance matters for the Czech economy, the article argues, because it could have far-reaching consequences.
Michl plays down the signal
Michl said the step should not be read as the start of a wider tightening cycle. “Today’s step cannot be perceived as part of a broader tightening of monetary policy,” he said.
The koruna lost ground once the vote split and his remarks reached the market.
Related: Bank of England raises rate to 4% in 8-1 vote · Brazil's central bank halts rate cuts, holds Selic at 13.75%
Source: Czech National Bank
