Investing.com -- The Czech central bank could potentially resume its monetary easing as early as next month, according to board member Jan Prochazka. However, the future of such action remains uncertain due to a combination of domestic and external risks.
In the previous month, the majority of policymakers in Prague decided to maintain the key interest rate at 4%. Despite this, Prochazka along with another central banker pushed for a ninth consecutive cut. Post this decision, the inflation data for December was softer than anticipated, and a downturn in the nation's primary manufacturing sector intensified.
Prochazka, 45, in an interview on Tuesday, stated that the data seen so far seems to support his belief that the fine-tuning process could recommence as early as in February. He added that beyond February, decisions would have to be taken on a meeting-by-meeting basis, heavily dependent on the data at hand.
One of the critical factors influencing the decision on February 6 will be the first-time release of preliminary inflation data for January, which is scheduled to be published on the day of the rate meeting.
Prochazka expressed his belief that unless the January flash inflation number indicates some severe re-pricing, another rate cut could certainly be a possibility. He further stated, "I can't speak for my colleagues, but I don't expect their views to be significantly different."
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