Czech central bank chief: no need to ease policy, no explosion in bad debt - paper

Credit: REUTERS/David W Cerny

The Czech central bank does not need to ease policy further after cutting rates by 200 basis points since March in response to the new coronavirus crisis, Governor Jiri Rusnok said in a newspaper interview on Saturday.

PRAGUE, July 18 (Reuters) - The Czech central bank does not need to ease policy further after cutting rates by 200 basis points since March in response to the new coronavirus crisis, Governor Jiri Rusnok said in a newspaper interview on Saturday.

Rusnok's view in the daily Pravo echoed his previous stance that the bank has done enough by the easing, coupled with relaxation of capital requirements, looser mortgage regulation and additional liquidity provision tools.

"Further easing is not required either by the general or economic situation," Rusnok said.

"There is also no reason to shift our monetary policy to an even more expansive level because we still have a relatively swift inflation rate."

The bank's main repo rate stands at 0.25% since the last cut in May.

Rusnok said he saw no explosion in debt defaults in the autumn when legislation giving borrowers an option for moratorium on debt payments expires.

He said the moratorium applied to around 14% of banking sector loan books, and he expected most debtors to start repayments after the moratorium while only a minority will have problems repaying debt, a proportion that banks have to be able to handle.

He said he felt the crown's exchange rate could hold around current levels around 26.6 to the euro unless a wave if uncertainty tied to the pandemic returns, which would weaken currencies such as the crown.

(Reporting by Jan Lopatka)

((jan.lopatka@thomsonreuters.com; +420 234 721 614; Reuters Messaging: jan.lopatka.thomsonreuters.com@reuters.net))

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