The Czech Republic’s central bank has made the decision to lower its key interest rate for the fifth consecutive time, as a response to low inflation and signs of economic recovery. This latest cut brings the interest rate down by half a percentage point, to 4.75%. Analysts had predicted this move, following a series of cuts that began in December of the previous year.
Inflation in the Czech Republic has been steadily declining, dropping to the bank’s target of 2.0% year-on-year in February. Although it slightly increased in April to 2.9%, it dropped back down to 2.6% in May. The economy showed positive growth, with a 0.2% year-on-year increase in the first quarter of 2024. This growth came after a slight contraction in the last quarter of 2023.
Central banks around the world are also considering lowering interest rates to manage inflation, including the European Central Bank, which cut its key interest rate on June 6th, moving ahead of the U.S Federal Reserve in lowering rates. However, Federal Reserve officials only expect to lower their benchmark interest rate once this year.
The Czech central bank’s decision to lower interest rates aims to stimulate economic activity and maintain inflation at a stable level.
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