Czech central banker: We need ECB easing

Weaker euro helping us: Czech central bank chief
Weaker euro helping us: Czech central bank chief   

As the European Central Bank's (ECB) next policy meeting looms, the governor of the Czech central bank has insisted that further euro zone easing will have "necessary" knock-on benefits for the Czech Republic.

The ECB is expected to leave monetary policy unchanged on Thursday, although there are growing calls for the bank to launch a full-blown quantitative easing package.

ECB President Mario Draghi is likely to wait until the new year before deciding on sovereign bond-buying measures - a move that Czech National Bank (CNB) Governor Miroslav Singer said he supported.

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Weak koruna helped us avoid deflation: Czech cental bank chief
Weak koruna helped us avoid deflation: Czech cental bank chief   

"It (further easing) is helpful for us. ECB easing is necessary for us, we are closely related with the euro zone and ECB easing should, in the long run, generate more demand in the euro zone, which is helpful for us," Singer told CNBC.

Speaking from the CNB in Prague, Singer said that easing could take some time to filter through to some weaker parts of the euro zone, but added that a weaker euro would help "shield" the Czech Republic's economy by giving some of the region's biggest countries a boost. The Czech Republic is a member of the European Union, but doesn't yet use the euro. Its currency is called the Czech koruna.

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The euro has weakened against the dollar and other currencies since the summer, falling to a two-year low against the greenback last month after Draghi hinted that the bank was prepared to undertake more stimulus. Singer added that a weaker euro had helped boost countries like Germany, which price their exports in euros. A weaker euro makes euro zone exports cheaper in the global market.

Prague, Old Town Hall (15th Century), Town Square and Church of our Lady Tyn (1365) at dawn.
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Prague, Old Town Hall (15th Century), Town Square and Church of our Lady Tyn (1365) at dawn.

"A weaker euro definitely has more advantages for the euro zone members that we depend on more," he said. "A weaker euro is bound to help German exporters. We are going to be more positively impacted by the easing we are already witnessing by the weaker euro. We will be shielded from the worst by what has already happened in the euro zone," he said.

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On the strength of the economy, the bank governor said the Czech economy was in good shape as it was driven by domestic factors, and that investment in the country was increasing. Its gross domestic product (GDP) expanded by 0.3 percent in the third quarter on the previous three months.

"In a nutshell, last year we were in the bottom third of EU countries in terms of growth, now we are in the upper third of European countries, so the change is pretty dramatic," he added.

- By CNBC's Jenny Cosgrave