Jiri Rusnok appointed CNB governor, central bank to lower interest rates to negative in 2016

Yesterday, Jiri Rusnok was nominated as CNB Governor by Czech President Milos Zeman. This was on par with expectations. Rusnok has been a board member of the central bank. He has also been the President’s ally from the early 2000’s. Rusnok reiterated his views yesterday, including importance on policy continuity and no sudden exit from the EUR/CZK floor. He stressed that it is quite early to talk about leaving the FX targeting regime.

The Czech National Bank is expected to lower its interest rates to negative in 2016, said Commerzbank in a research report. Recently, Rusnok had mentioned the perils of permitting the spread between ECB and CNB to broaden.

Meanwhile, Zeman mentioned that he will nominate Oldrich Dedek, the euro adoption coordinator of the Czech government, to the central bank’s board in February 2017. With Zeman’s solid pro-euro stance, the euro adoption debate is likely to gather momentum in months to come, added Commerzbank.