Rusnok and the Fed

The 41-month intervention against the crown ended two years ago on Saturday. CNB Gov. Jiří Rusnok and a majority of the Bank Board embarked on April 6, 2017, on a revaluation of the crown that relied on aggressive currency forecasts and regular interest-rate hikes. When the desired appreciation failed to materialize, Rusnok started speaking of a "currency shock." In recent months, though, he has changed his tune and even spoke last month about the possible need to cut interest rates later this year. The reversal in language came at basically the same time as a similar reversal by the Federal Reserve. Donald Trump had been hounding Fed Chair Jerome Powell for raising rates too much. Few people have noticed, but the increases in the CNB's interest rates over the past two years match very closely those of the Fed, with a 6-12 month lag. It's an odd situation when the CR is dependent on the eurozone for most of its trade, but it's monetary policy is in step with the Fed's.