Prague - Czech National Bank (ČNB) Governor Zdeněk Tůma told Czech Television on Sunday that the Czech economic growth in 2009 will be even slower than the previously forecast 3.6 percent.
The drastic slowdown from last year's 6.6 percent growth may hurt the public finances and potentially delay the euro adoption.
"If the ČNB is changing the interest rates in the upcoming weeks, it will be probably lowering them," said Tůma.
Finance analysts expect the central bank's board to adopt a rate cut at its next meeting on 6 November. During the meeting, the bank will present an updated economic prognosis for 2009.
The Finance Ministry initially expected a 4.8 percent growth when drafting next year's state budget.
Deputy Finance Minister Eduard Janota has now admitted that if the economy slows more, the government will have to dramatically reduce its spending.
"We expect that with an economic growth of 3.7 percent we would have to correct the budget by some 10 to 12 billion crowns. We are prepared for this," Janota said.