An Eighth Central Bank Rate Hike in the Czech Republic

May 2, 2019

Monetary officials at the Czech National Bank unanimously agreed to raise the 2-week repo rate by a quarter percentage point to 2.0%. Earlier 25-basis point rate hikes occurred in November 2017 and February, June, August, September and November of last year. This tightening cycle began in August 2017 with a move to 0.25% from the long-term low of 0.05%.

In a released statement, officials said that domestic inflation is still in the upper half of the target range and probably will not fall to the 2% middle until early in 2020. They expect domestic interest rates to go higher near term but then stabilize through mid-2020. “By comparison with the previous forecast, the inflation outlook for this year has been raised owing to stronger price growth at the start of the year. By contrast, the forecast for growth in domestic economic activity has been lowered, due mainly to a worse external demand outlook.”

Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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