2-Week Repo Rate in Czech Republic
The 2-Week Repo Rate ended 2022 at 7.00%, up from the 3.75% end-2021 value and significantly higher than the 0.05% rate a decade earlier. For reference, the average 2-Week Repo Rate in Eastern Europe was 8.40% at the end of 2022. For more interest rate information, visit our dedicated page.
Czech Republic Interest Rate Chart
Note: This chart displays Policy Interest Rate (%) for Czech Republic from 2019 to 2018.
Source: Macrobond.
Czech Republic Interest Rate Data
2019 | 2020 | 2021 | 2022 | 2023 | |
---|---|---|---|---|---|
2-Week Repo Rate (%, eop) | 2.00 | 0.25 | 3.75 | 7.00 | 6.75 |
3-Month PRIBOR (%, eop) | 2.18 | 0.36 | 4.08 | 7.26 | 6.77 |
10-Year Bond Yield (%, eop) | 1.63 | 1.28 | 2.73 | 5.02 | 3.75 |
Central Bank cuts rates in June
At its meeting on 27 June, the Board of the Czech National Bank (CNB) lowered the 2-week repo rate by 50 basis points to 4.75%. Moreover, the CNB lowered the discount and Lombard rates by the same amount to 3.75% and 5.75%, respectively. The cut, which followed May’s same-sized reduction, took markets by surprise, as a smaller interest rate cut had been priced in. Moreover, the move was not unanimous: Two of the seven total board members voted for a smaller, 25 basis point reduction.
The key domestic factors driving the Central Bank's decision on interest rates were primarily related to price pressures; while inflation was above the midpoint of the CNB’s 1.0–3.0% tolerance band in May, it remained within range, coming in at 2.6%. The Bank noted that, despite the cut, interest rates remain significantly positive, meaning they will continue to drive inflation towards the 2.0% target.
Looking ahead, the Central Bank stated that rate reductions would slow down once interest rates approached their neutral level. Moreover, it added that upside risks to the inflationary outlook remain—like higher wage demands—and that it would therefore take large interest rate cuts off the table going forward. Moreover, it added that the interest rate reduction process could be paused or terminated at any time if inflation, especially its core component, does not behave as expected. The next meeting is set for 1 August. All our panelists see further cuts this year, although there is a 125 basis points spread between the maximum and minimum projection.
How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Czech interest rate projections for the next ten years from a panel of 24 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for Czech interest rate.
Download one of our sample reports to visualize what a Consensus Forecast is and see our Czech interest rate projections.
Want to get access to the full dataset of Czech interest rate forecasts? Send an email to info@focus-economics.com.
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