Czech National Bank cuts 2016 inflation and GDP growth outlook, says prepared for negative rates

The Czech National Bank has released a summary of its forecast changes that will be published in its second quarter Inflation Report. The central bank has cut its outlook for 2016 inflation to 0.4% from the earlier projection of 1%. This is below Commerzbank’s projection of 0.5%. The Czech National Bank also cut its outlook for 2016 GDP growth to 2.3%, as compared with the earlier outlook of 2.7%.

It is evident that inflation and growth cycles are becoming weak. The central bank board members are emphasising the rise in discussions about negative interest rates. The board members have mentioned that the central bank is ‘technically ready’ for additional action.

“We do forecast a negative discount rate of -0.15% by year-end”, said Commerzbank.