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Czech Republic Interest Rate

Czech Republic Interest Rate

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 ECB Refinancing Rate (%, eop) for Czech Republic from 2014 to 2023.
Source: Czech National Bank.

Czech Republic Interest Rate Data

2018 2019 2020 2021 2022
2-Week Repo Rate (%, eop) 1.75 2.00 0.25 3.75 7.00
3-Month PRIBOR (%, eop) 2.01 2.18 0.36 4.08 7.26
10-Year Bond Yield (%, eop) 1.85 1.63 1.28 2.73 5.02

Czech National Bank doubles down on monetary easing in February

At its 8 February meeting, the Board of the Czech National Bank (CNB) cut the 2-week repo rate to 6.25% from 6.75%, following a 25 basis point cut at its previous meeting in December. In addition, the CNB reduced both the Lombard rate and the discount rate by 50 basis points to 7.25% and 5.25%, respectively. Six out of the seven board members voted to reduce rates by 50 basis points, while one voted to deliver a more aggressive 75 basis point cut.

The Bank decided to intensify the pace of monetary easing amid a pronounced moderation in price pressures; it expects inflation to have dropped to around 3.0% in January. That said, it stated that the pace of easing must be gradual due to upside inflationary risks stemming from elevated inflation expectations and an acceleration in money creation due to increased lending in the real estate market. Meanwhile, the Bank expects inflation to average 2.6% in 2024 and 2.0% in 2025.

Looking ahead, the Bank said that it would base future decisions on the persistence of the disinflationary trend, the economic impact of fiscal policy, the performance of the labor market and the evolution of domestic and external demand. It also reiterated that “the interest rate reduction process can be paused or terminated at any time at levels that are still restrictive if inflation does not decrease in line with the forecast”. Our panelists expect the CNB to cut rates further by year-end due to declining price pressures. The Bank’s next meeting will be on 20 March.

Commenting on the Bank’s decision, Erste Bank’s Jiri Polansky stated: “By cutting rates more significantly, the CNB is probably not worried about inflation in the coming months and is instead placing more emphasis on the development of the real economy. The CNB is likely to cut rates at its next meetings as well. For the end of this year, we expect the CNB's main rate at 4%; the market is now even more optimistic (3.50%).” Meanwhile, ING’s Frantisek Taborsky commented: “For now, we leave our forecast unchanged with 50bp cuts for the next meetings with the rate at 4% at year-end. If inflation surprises significantly to the downside, below 2.5%, and EUR/CZK returns below 25.00—which is our forecast—we may see a chance for an acceleration later but not for the upcoming meetings.”

Consensus Forecasts and Projections for the next ten years

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 23 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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