- Decision
- Maintain
- Rate change
- 0 bps
- two-week repo rate
- 3.75%
The Czech National Bank unanimously kept the two-week repo rate at 3.75%, saying relatively tight monetary policy remains necessary as core inflation persists and risks to the outlook are inflationary overall. Over the past year, it held the rate at 3.50% before raising it by 25 basis points in June 2026. Inflation is forecast to average 2% in 2026 and 2.5% in 2027, with a temporary increase expected in late 2026 and early 2027, while core inflation has remained just below 3% for eight months. The central bank lowered its 2026 GDP growth forecast to 2.2%, as accelerating credit growth, rapid wage gains, elevated services and property price inflation, and debt-financed public spending add to price pressures. Weakness in some euro area economies and a possible global asset-price correction could be anti-inflationary, while geopolitical conflicts, trade barriers and high public debt remain uncertainties. The Board will assess incoming data and the effects of its previous tightening before considering further action, with its stance dependent on inflation persistence, the koruna, fiscal policy, labour market tightness and demand.
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.