Final Word from Thursday, February 23, 2006
The Czech National Bank is expected to cut interest rates today as a way to combat the appreciation of the crown. Or, who knows, perhaps the CNB will instead raise rates: It's behavior has been unpredictable lately, prompting unusually strong criticism from analysts. Viktor Kotlán of Česká spořitelna noted in Euro that while the CNB has been trying to talk down the crown, its own trading department has been sending the opposite signal by buying the currency. One theory is that the CNB has been devoting so much effort to lobbying for more powers that it has neglected its monetary-policy duties. Once the CR adopts the euro, the CNB will lose much of its raison d'?tre, and it has successfully lobbied Parliament to give it full control of capital-markets oversight as compensation. But while the CNB's powers are increasing, its credibility and influence are declining. [Czech Republic central bank SEC securities commission]