Czech central bank cuts key interest rate amid economic recovery

PRAGUE, Czech Republic: Amid easing inflation and signs of an economic recovery, the Czech Republic’s central bank cut its key interest rate for the fourth consecutive time this week.

In a move expected by analysts, the half-percentage point cut brought the interest rate down to 5.25 percent.

On December 21, the bank started to reduce borrowing costs by a quarter-point, marking its first cut since June 22, 2022.

It again cut rates by a half-percentage point on February 8 and another half-percentage on March 20.

Data from the Czech Statistics Office showed that inflation dropped to 10.7 percent in 2023 from 15.1 percent in 2022 and declined to 2.0 percent year-on-year in February, meeting the bank’s target. This figure remained unchanged in March.

Preliminary figures released by the Statistics Office indicated this week also showed that the Czech economy was up 0.4 percent year-on-year in the first quarter of 2024 and increased by 0.5 percent compared to the last three months of 2023.

Central banks in many countries, including the U.S. Federal Reserve, are deciding whether inflation has been controlled enough for them to begin cutting interest rates.