Czech National Bank reduces main interest rate to 4% amid low inflation rates

The central bank of the Czech Republic announced on Thursday that it is reducing its key interest rate for the eighth consecutive time, as both inflation remains subdued and the economy is gradually recovering.

This anticipated reduction cut the interest rate by 0.25 percentage points down to 4%.

The central bank had initially begun to decrease borrowing costs on December 21, marking its first cut since June 22, 2022, by the same margin of a quarter-point.

Subsequent cuts included a half-percentage point reduction on February 8, March 20, May 2, and another on June 27. Another quarter-point cut was implemented on August 1 and again on September 25.

Recent data from the national statistics office indicates that the Czech economy grew by 1.3% year-on-year in the third quarter of 2024, reflecting a 0.3% increase compared to the previous quarter.

Inflation rates stood at 2.6% year-on-year in September, which is a decrease of 0.4% from August, while the central bank aims for an inflation target of 2%.

In addition, the European Central Bank, which governs interest rates for 20 euro-using nations, also cut its borrowing costs from 3.5% to 3.25% on October 17, marking its third reduction since June.

Meanwhile, the U.S. Federal Reserve was poised to reduce its key interest rate for the second consecutive time on Thursday, in light of a consistent decline in inflationary pressures that have created challenges for many Americans, influencing the political landscape during Donald Trump’s presidential campaign.