The Czech National Bank acted as expected on Thursday and cut the two-week repossession rate by 25 basis points to 2.75%, the discount rate to 1.75% and the Lombard rate to 3.75%, according to CNB's Pavel Zubek. Citing the previous cuts this year, CNB governor Zdenek Tuma told reporters that the earlier changes could not have fully impacted the economy yet.

The reasons for a rate cut were primarily the weak growth of the global economy, low inflation, as well as the crown's rate that the central bank still considers overvalued, he said. Tuma said that CNB had revised its forecasts for GDP growth in 2002 down from 2.0-2.7% to 1.8-2.3%, while next year's growth is expected at 1.1-2.6%, against the previous estimate of a 2.1-3.8% growth. Against other forecasters, CNB is being more pessimistic about GDP growth. The finance ministry is forecasting growth at 2% for both 2002 and 2003 while the IMF predicts GDP growth of 2.7% this year growing to 3.2% next year.

(NewsBase 01.xi.02)