The Czech Republic’s central bank has cut its key interest rate for the fifth consecutive time, as inflation remains low and the economy shows signs of recovery. This reduction was done by half a percentage point, bringing the interest rate to 4.75%, following a series of previous cuts that began in December 2022.
Inflation in the Czech Republic dropped from 15.1% in 2022 to 10.7% in 2023 and reached the bank’s target of 2.0% year-on-year in February, fluctuating between 2.6% and 2.9% in the following months. The economy also showed growth of 0.2% year-on-year in the first quarter of 2024, compared to a contraction of 0.2% at the end of 2023, showing positive signs for economic recovery.
Central banks worldwide are considering lowering borrowing costs to combat inflation, as seen with the European Central Bank cutting its key interest rate to 3.75% on June 6th and the U.S Federal Reserve expected to lower its rate once this year. Both banks are closely monitoring inflation and economic growth to make informed decisions on interest rates
