The Czech Republic’s central bank reduced its key interest rate to 4.25% on Wednesday, marking the seventh consecutive cut as inflation remains low and the economy slowly recovers. Analysts had anticipated this quarter-point reduction. The bank began lowering borrowing costs by a quarter-point on December 21, following the first cut since June 22, 2022. Subsequent half-point cuts occurred on February 8, March 20, May 2, and June 27, with another quarter-point cut on August 1.
The Czech economy grew by 0.6% year-on-year in the second quarter of 2024 and increased by 0.3% compared to the previous three months, according to the Czech Statistics Office. The bank forecasts a growth rate of 1.2% for 2024. Inflation stood at 2.2% year-on-year in August, consistent with the previous month and close to the bank’s target of 2%.
Meanwhile, the European Central Bank lowered its key interest rate from 3.75% to 3.5% on September 12 to stimulate growth through reduced borrowing costs for businesses and homebuyers. On September 19, the U.S. Federal Reserve made a significant move by cutting its benchmark interest rate by half a point after more than two years of high rates aimed at controlling inflation but which also made borrowing costly for American consumers.