- Decision
- Maintain
- Rate change
- 0 bps
- two-week repo rate
- 3.5%
The Bank Board of the Czech National Bank on 18 December 2025 voted unanimously (6–0) to leave the two-week repo rate at 3.5 percent, citing persistent domestic price pressures—elevated core and services inflation, rapid wage growth and brisk credit-driven money expansion—which continue to call for “relatively tight” monetary conditions to keep headline inflation anchored near the 2 percent target. After two 25 bp cuts in February and May, the policy rate has been on hold at 3.5 percent since May. No operational changes were announced. Headline inflation has hovered around target since January 2024 and is forecast to stay slightly above 2 percent through end-2026, while GDP grew 0.8 percent q/q and 2.8 percent y/y in Q3 on resilient household consumption; unemployment remains low and wages increased 7.1 percent y/y, reinforcing demand-driven inflation. The board flagged strong credit growth, money supply expansion, elevated services costs and rising property prices as upside risks, countered by the potential dampening impact of a stronger koruna and weak euro-area activity amid growing trade barriers and geopolitical uncertainties. Policymakers reiterated their readiness to keep policy tight as long as needed, with future moves hinging on incoming data, labour-market tightness, fiscal stance, exchange-rate developments and the policy paths of major foreign central banks.
Rate evolution
The Czech National Bank lowered the two-week repo rate by 25 basis points to 3.5%, held it in December and again in March and May 2026, raised it by 25 basis points to 3.75% on 18 June, and kept it unchanged on 6 August and 17 September, when all seven members backed the hold. It said easing room was limited because domestic inflation pressures persisted even with inflation near or within the tolerance band around the 2% target, citing elevated core and services inflation, strong wage growth, a tight labour market, firmer household consumption, rising property prices and strengthening credit and money growth, while weak external demand, trade barriers and geopolitics clouded activity. Across the December, March and May holds, the Bank Board continued to describe policy as relatively tight, while its risk assessment moved from modestly inflationary overall to inflationary overall and then balanced overall as domestic upside risks were increasingly offset by a stronger koruna, weak euro area activity and the risk of a global asset-price correction.
In June, the Bank Board returned the risk assessment to inflationary overall and said the increase would help lower core inflation and maintain a low-inflation environment, while on 6 August it judged that the move had delivered the desired tightening of monetary conditions and shifted to assessing incoming data, the outlook, inflationary risks and the effects of policy restriction as core inflation remained just below 3% without a significant downward tendency for eight months. On 17 September, it said the June increase had so far sufficiently tightened monetary conditions and that higher longer-term interest rates had also tightened financial conditions, although core inflation remained elevated and the upside risk from commodity market developments had intensified. The Bank Board again assessed risks as inflationary overall, citing persistent core and services inflation, credit growth and debt-financed public spending, rapid wage growth, a tight labour market and property prices, while weak euro area activity and a possible global asset-price correction could have an anti-inflationary effect, and said continued tight monetary policy was needed, with its next decision to be between holding the policy rate and raising it.