Interest Rate in Czech Republic
Czech Republic - Interest Rate
CNB stays put in December
On 18 December, the board of the Czech National Bank (CNB) decided to keep the two-week repo rate steady at 2.00%, marking the fifth consecutive hold and coming broadly in line with market expectations. The decision, however, was not unanimous, as two of the seven members—as in the last November meeting—voted to hike the repo rate to 2.25%. In addition, the CNB left both the Lombard and discount rates unchanged at 3.00% and 1.00%, respectively.
As in the previous meeting, those members who voted for a rate hike highlighted the increased inflationary pressures seen recently, with inflation hovering close to the upper bound of the 1.0%–3.0% tolerance band and overshooting it in November. That said, the economic backdrop at home was the dominant factor for prompting the Bank to stay put. Although the economy continues to fare well, it has started to show some signs of weakness. Growth came in lower than expected in Q3, weighed on by waning household consumption and subdued industrial production. And despite the Bank recognizing that external risks have diminished somewhat recently, which drove its decision to remain on hold in last meeting, uncertainty surrounding the domestic economy underpinned the Bank’s prudent decision this time around.
Looking ahead, the dissenting votes which called for further policy tightening renders the Bank’s forward guidance as slightly hawkish. However, in the press conference, policymakers hinted at a wait-and-see approach going forward, assessing incoming data before making a decision. In particular, it would have to strike a delicate balance between increased inflationary pressures and slowing domestic activity with lingering foreign risks.
Commenting on the CNB’s policy direction ahead, economists at ING Czech Republic noted:
“All in all, today's press conference supports our view that if the situation abroad improves slightly (as the market now believes after the US-China trade deal) and domestic economic activity won’t deteriorate further, a rate hike next year is becoming a quite likely scenario (though it is not a done deal yet as it will depend on how new data both from abroad and domestically will evolve).”
The next monetary policy meeting is scheduled for 6 February.
FocusEconomics Consensus Forecast panelists see the two-week repo rate to end 2020 at 2.00% and 2021 at 1.91%.
Czech Republic - Interest Rate Data
|Policy Interest Rate (%)||0.05||0.05||0.05||0.05||0.50|
5 years of economic forecasts for more than 30 economic indicators.
Czech Republic Interest Rate Chart
Czech Republic Facts
|Bond Yield||1.64||-1.85 %||Dec 31|
|Exchange Rate||22.76||-0.66 %||Dec 30|
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January 10, 2020
Industrial production fell 3.2% year-on-year in working-day adjusted terms in November, which followed a 0.4% slip recorded in October.
January 2, 2020
The manufacturing Purchasing Managers’ Index (PMI), produced by IHS Markit, rose marginally to 43.6 in December from 43.5 in November, which had marked a four-month low.
December 27, 2019
The economic sentiment indicator, published by the Czech Statistical Office (CSO), bounced back to 93.8 in December from 93.3 in November, which had marked the lowest print since July 2014.
December 18, 2019
On 18 December, the board of the Czech National Bank (CNB) decided to keep the two-week repo rate steady at 2.00%, marking the fifth consecutive hold and coming broadly in line with market expectations.
December 13, 2019
Consumer prices rose 0.2% from the previous month in December, following November’s 0.3% increase.