The Czech Republic’s central bank has cut its key interest rate for the fifth time in a row, in response to low inflation and signs of economic recovery. The latest cut brings the interest rate down by half a percentage point to 4.75%. This decision was predicted by analysts and follows a series of cuts that started in December of the previous year.
Inflation in the Czech Republic has been on the decline, dropping to the bank’s target of 2.0% year-on-year in February. While it increased slightly in April to 2.9%, it dropped back down to 2.6% in May. The economy showed some positive growth, with a 0.2% year-on-year increase in the first quarter of 2024.
This growth comes after a slight contraction in the last quarter of 2023. Central banks around the world are also considering lowering interest rates to manage inflation. The European Central Bank cut its key interest rate on June 6, moving ahead of the U.S. Federal Reserve in lowering rates.
Although Federal Reserve officials have seen some progress in managing inflation, they 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.