On May 2, 2024, the Czech Republic’s central bank announced its decision to cut its key interest rate for the fourth consecutive time, due to a decrease in inflation and signs of economic recovery. The interest rate was reduced by half a percentage point to 5.25%, a move that was widely anticipated by analysts.
This series of rate cuts began on December 21, which was the first cut since June 22, 2022. Subsequent cuts followed on February 8 and March 20. Inflation in the Czech Republic decreased from 10.7% in 2023 to 2.0% year-on-year in February, meeting the central bank’s target. It remained at the same level in March.
Preliminary figures released by the Statistics Office indicated that the Czech economy grew by 0.4% year-on-year in the first quarter of 2024, and by 0.5% compared to the previous quarter. This growth came after a contraction of 0.2% in the last quarter of 2023.
The central bank’s decision to cut interest rates aligns with efforts by central banks globally, such as the U.S. Federal Reserve and the European Central Bank, to assess whether inflation is under control. While the European Central Bank signaled a potential rate cut in June, the U.S. Federal Reserve has emphasized the need for sustained slowing of price increases before considering rate cuts to its 2% target.