Czech central bank cuts buffer rate for banks for second time in a row

Moneta Money Bank, A.s

14/09/2023 14:45

PRAGUE, Sept 14 (Reuters) - The Czech National Bank's
(CNB) board decided for a second quarter in a row to lower the
countercyclical capital buffer rate for banks, cutting it to
2.00% due to a gradual drop in cyclical systemic risks, the bank
said on Thursday.
    The cut in the buffer rate, designed to safeguard the sector
against economic swings, follows a reduction to 2.25%, from
2.50%, delivered in June - the first drop in the rate since the
coronavirus pandemic in 2020.
    The CNB said in times of falling economic activity, it was
customary to lower the rate so companies and households "have
access to loans without excessively tight conditions". 
    "When making its decision, the Bank Board took into account
the current position of the Czech economy in the financial
cycle, the size of the credit risks accumulated in the banking
sector’s balance sheet and the evolution of its vulnerability,"
the bank said.
    The Czech Republic has seen a sluggish rebound from a
recession last year as high inflation hits consumer spending and
weighs on order books of manufacturers.
    The central bank has maintained its base policy rate at
7.00%  CZCBIR=ECI  since the middle of 2022 and has signalled it
would be cautious in following peers in Poland or Hungary in
starting to cut rates from more than two-decade highs.
    Lending by banks this year has been subdued, largely with
fewer home mortgage loans as high rates and inflation hit
demand.
     

 (Reporting by Jason Hovet)
 ((jason.hovet@thomsonreuters.com;))