September 27, 2012 / 11:14 AM / in 5 years

Czech central bank cuts rates to record low as expected

PRAGUE (Reuters) - The Czech central bank cut its key two-week repo rate by 25 basis points to a record low 0.25 percent on Thursday as expected, to bolster demand in the shrinking economy.

The seven-member policy board also trimmed the Lombard rate used for overnight lending to banks by hefty 75 basis points to 0.75 percent and cut the discount rate paid to banks for overnight deposits by 15 basis points to 0.10 percent.

The moves in the rarely-used Lombard and discount rates showed the bank aimed to influence the interbank market rate corridor beyond moving the main repo rate.

Governor Miroslav Singer will hold a news conference at 1230 GMT to spell out the reasons behind the decision. He may also comment on the possibility of deploying unconventional policy tools.

Reporting by Jana Mlcochova; Editing by Hugh Lawson

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