Czech central bank cuts interest rate to 0.05 pct

[November 02, 2012]  PRAGUE (AP) -- The Czech Republic's central bank has cut its key interest rate to 0.05 percent -- a new record low since the country was formed in 1993 after the breakup of Czechoslovakia.

The central bank had last cut the rate in September to 0.25 percent, the previous record low.

Thursday's move is aimed at helping the struggling export-oriented economy and was mostly expected by analysts.

The Czech economy has been in recession and it shrank by 0.2 percent in the second quarter of the year. The central bank forecast in September the economy will contract by 0.9 percent this year before rebounding by 0.8 percent in 2013.

The Czech Republic does not use the common European euro currency but eurozone countries, including Germany, are its major trading partners.

[Associated Press]

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