The Czech central bank will probably keep borrowing costs unchanged for an 11th meeting today and policy makers may signal a delay in raising interest rates as the euro-area debt crisis worsens the economic outlook. All 19 analysts in a Bloomberg survey forecast the Ceska Narodni Banka to keep the benchmark two-week repurchase rate at a record-low 0.75 percent, half of the European Central Bank’s main rate, maintaining stable borrowing costs since May 2010. The bank will announce the decision at 1 p.m. in Prague and will comment on it at a news conference at 2:30 p.m. Czech policy makers has bucked monetary tightening this year as central banks across Europe increased credit costs to fend off inflation pressures. An economic slowdown in the euro area, the main market for Czech exports, and a lower outlook for borrowing costs than previously thought in the currency bloc, have postponed raising Czech rates until around the end of this year, according to a central bank forecast from August. “We expect the Ceska Narodni Banka to sound dovish after the monetary policy meeting,” Jaromir Sindel, the Citigroup Inc. economist for Czech and Slovak Republics, wrote in a note before the rate decision. “The bank board is likely to reiterate downside risk that points to a further postponement in any hike to policy rates.” Changing Expectations Investors have scaled back bets on an increase in Czech interest rates. Forward-rate agreements locking-in three month interest rates in six-months fell to 1.115 percent as of 9:16 a.m. in Prague today, according to mid-prices compiled by Bloomberg, from 1.330 percent at the time of the last monetary meeting on Aug. 4. The three-month Prague interbank offered rate, or Pribor, was 1.17 percent. The Czech koruna has weakened 1.8 percent in the past month, the smallest decline among currencies of the three largest eastern members of the EU, according to data compiled by Bloomberg. The currency has gained 0.3 percent this year and traded little changed at 24.944 to the euro at 9:16 a.m. in Prague. Downside risks to Czech inflation are materializing, which is boosting the chance for a delay in monetary tightening, Governor Miroslav Singer said in a Sept. 9 interview. A further escalation of the euro-area debt crisis may delay an increase in interest rates beyond the projection in the August forecast, board member Lubomir Lizal said in a Sept. 6 interview. Kamil Janacek and Eva Zamrazilova, two board members who voted for higher rates at the last three meetings, were quoted by Czech media as saying in September that economic uncertainty is clouding the outlook for Czech interest rates. Slowing Growth Czech economic growth eased in the second quarter for the first time since a 2009 recession as a slowdown in the EU dented demand for exports and government austerity measures curbed domestic spending. The inflation rate has been below the central bank’s target for three months, while industrial output growth has slowed and retail sales have fallen. GDP rose 2.2 percent in the second quarter from a year earlier, after growing 2.8 percent in the first three months. August’s inflation rate was 1.7 percent, unchanged from July and less than the 2 percent central bank target. July retail sales were down 1.7 percent from a year earlier, while industrial- output growth slowed to 4.4 percent, the worst reading in 19 months. The economic recovery is dependent on EU demand for its products, which include Skoda Auto AS vehicles and car parts. The bloc purchases about 80 percent of Czech exports, with Germany alone accounting for a third. Czech Finance Minister Miroslav Kalousek said on Aug. 21 the ministry will probably cut its 2.5 percent forecast for 2012 economic growth because of the slowdown in the euro area. The International Monetary Fund lowered its 2011 GDP estimate to 2.3 percent on Sept. 20 from a June forecast of 2.9 percent. The ECB on Sept. 8 cut its euro-region growth forecast for 2011 to 1.6 percent from 1.9 percent and its 2012 forecast to 1.3 percent from 1.7 percent. The EU said on Sept. 15 the euro- area economy may come “close to standstill at year-end.” To contact the reporter on this story: Peter Laca in Prague at placa@bloomberg.net To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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