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. The interest rate was reduced by half a percentage point to 4.75%, after a series of previous cuts starting in December 2022.
Inflation in the Czech Republic has 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. It fluctuated between 2.6% and 2.9% in the following months. The economy 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.
Central banks worldwide are considering lowering borrowing costs to combat inflation. The European Central Bank cut its key interest rate to 3.75% on June 6, while the U.S. Federal Reserve is expected to lower its rate once this year. Both banks are closely monitoring inflation and economic growth to make informed decisions on interest rates.