The Bank Board of the Czech National Bank raised its basic interest rate to
2 percent, an increase of 0.25 percent, the Czech News Agency reports. It
is the first rise since November 2018 and interest rates are now at their
highest in the past 10 years.
Analysts told the Czech News Agency the increase is mainly due to developments in the country’s economy, with inflation rates rising above predictions in the first quarter of 2019 and the exchange rate for the Czech crown weaker than the bank predicted in February.
The bank has also decided to go ahead with 0.25 percent raises in the Lombard rate, which deals with short-term liquidity loans to commercial banks and the discount rate.
The Czech National Bank on Thursday raised the basic interest rate by a
quarter of a percentage point to 1.75 percent. It is already the fifth hike
in interest rates this year, as the bank response to rapid pace of wage
growth and the resulting impact on inflation.
According to Central Bank governor Jiří Rusnok, there will be no more hikes before the end of the year. The Czech National Bank has also downgraded its growth forecast for this year to 3.1 percent and for next year to 3.3 percent.
The central bank is likely to increase the basic interest rate to 1.75
percent at a meeting of the bank‘s board on Thursday, according to
The National Bank last raised the basic interest rate by a quarter of a percentage point to 1.5 percent in late September.
The board has raised interest rates by 25 basis points at the three rate-setting sessions since June, citing economic growth, inflation and wage development.
The average mortgage interest rates in the Czech Republic are the sixth
highest in EU, suggests a study carried out by the website ChytrýHonza.cz,
based on data from Eurostat, the European Central Bank and Crédit Foncier.
According to the data, interest rates on mortgages in Europe range from 1.09% in Denmark to 4.4% in Poland. In the Czech Republic, the average rate is 2.2%. However, the level of indebtedness of the Czechs is not as great as, for example, that of the French.
The Czech National Bank (ČNB) board has increased the two-week repo rate
by 25 basis points to 1.5 percent. At the same time, it increased the
Lombard rate to 2.5 percent and the discount rate to 0.5 percent.
The board has raised interest rates by 25 basis points at the three rate-setting sessions since June. The new levels come into effect on 27 September 2018.
Earlier, central bank governor Jiří Rusnok, citing economic growth, inflation and wage development, said he would not rule out more hikes before the end of the year.
The central bank is likely to increase the basic interest rate to 1.5
percent at a meeting of the bank‘s board on Wednesday, according to
financial experts. The National Bank last raised the basic interest rate by
a quarter of a percentage point to 1.25 percent in August.
Central bank governor Jiří Rusnok has not ruled out more hikes before the end of the year saying economic growth, inflation and wage development all indicate the likelihood of this development.
Czech central bank governor Jiri Rusnok has said that due to the revved-up
economy the bank was likely to increase interest rates before the end of
the month and then one more time before the end of the year.
In an interview for Reuters Rusnok said he expected a serious debate on a possible interest rate move at a meeting of the bank board on September 26, saying a hike was a strong possibility and there were few arguments against it.
The Czech National Bank has lifted interest rates at its last two policy meetings.
At its meeting on Thursday, the Czech National Bank Board increased the
two-week repo rate by 25 basis points to 1.25%. At the same time, it
increased the Lombard rate by 25 basis points to 2.25% and the discount
rate by 20 basis points to 0.25%.
The new interest rate levels come into effect on 3 August 2018.
It is the third hike in interest rates since the end of the bank’s forex interventions against the crown. National Bank Governor Jiří Rusnok has not ruled out further increases this year.
The Czech National Bank will likely raise its key interest rate by a
quarter percentage point to 1.25 per cent at its board meeting on Thursday,
according to a poll of analysts by state news agency ČTK.
ING chief economist Jakub Seidler told the news agency there is an 80 per cent chance of a rate hike, according to market predictions.
The reasons are the unexpected weakening of the koruna, rising inflation and the tight labour market. The annual inflation rate rose to an eight-month high of 2.6 per cent in July. The unemployment rate, at 2.9 per cent, is at its lowest level in 22 years.
The weakening crown coupled with robust wage growth could lead Czech central bankers to consider the first back-to-back increase in interest rates in over a decade at their next policy-setting meeting, the Bloomberg news agency reported on Tuesday, citing interviews with two board members keen to cool the overheating economy.