Czech National Bank Keeps Two-Week Repo Rate at 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.