Czech growth slows but demand still remains strong

...household spending, the Czech Statistical Bureau (CSU) said on Friday.

The result was exactly in line with the forecast in a Reuters poll of analysts and confirmed the outlook that interest rates, 75 basis points below the euro zone, would continue to rise after 25 basis point hikes in May, July and August.

The CSU also revised first-quarter growth up to 6.4 percent from a previously reported 6.1 percent.

Household spending grew by 6.5 percent in April-June, as Czechs took advantage of growing wages to spend on cars, food, household equipment and holidays.

Household demand dipped from a 7.2 percent rise in the first quarter, but was still the second highest quarterly number in three years. Government spending dipped 1.6 percent.

Investments, listed as gross fixed capital formation, rose by 4.2 percent, and inventories jumped.

The foreign trade surplus had a very small contribution to growth.

"I think this number should not significantly affect thoughts about monetary policy development. Another interest rate rise is on the way this year or at the beginning of next year," said David Marek, chief economist at Patria Finance.

With the three hikes so far this year by the central bank, the main two-week repo rate currently stands at 3.25 percent.

The crown currency was flat at 27.59 to the euro after the data.