ČNB Board meeting ends, rates not discussed

Prague, Nov 20 (CTK) - Thursday's meeting of the Bank Board of the Czech National Bank (CNB) has ended and the central bankers did not discuss monetary policy issues, spokesman Pavel Zubek told CTK Thursday.

The benchmark rate thus stays at 2.75 percent.

The central bank surprisingly cut interest rates by 75 basis points at the beginning of November due to subsiding inflation and expected economic downturn caused by the financial crisis.

Four members of the governing board voted for the rate cut, one voted for a decrease by 0.5 percentage point. Eva Zamrazilova and Robert Holman were not present at the meeting.

The Czech Republic has the lowest interest rates in the EU.

Analysts are of the opinion that the central bank still has space for further rate cuts. Inflation is expected to be low next year in harmony with the CNB's 3 percent inflation target.

GDP growth should slow notably as well. The central bank's new forecast reckons on a cut in market interest rates and their subsequent moderate growth at the turn of 2009 and 2010.

Analysts mostly put the interest rate bottom at 2.25 to 2 percent.

Inflation should fall to 2.3 percent in Q3 2009 and 2 percent in Q1 2010, or to the new inflation target valid as of 2010.

The CNB expects Czech GDP to grow by 2.9 percent next year and by 4.5 percent this year.