The Czech Republic’s central bank recently announced its decision to lower the key interest rate for the seventh consecutive time in response to ongoing low inflation and a sluggish economic recovery. Analysts had anticipated this move, which reduced the interest rate by a quarter of a percentage point to 4.25%. The series of rate cuts began on December 21, following the first decrease since June 2022. Subsequent reductions of half a percentage point were implemented on February 8, March 20, May 2, and June 27, with an additional quarter-point cut on August 1.

Data from the Czech Statistics Office indicated a 0.6% increase in the size of the Czech economy year-on-year in the second quarter of 2024, with a 0.3% rise compared to the previous three months. The central bank has forecasted a 1.2% growth rate for the country in 2024. Inflation stood at 2.2% year-on-year in August, consistent with the previous month and aligning closely with the bank’s target of 2.0%.

In a similar move to support sluggish growth, the European Central Bank reduced its key interest rate from 3.75% to 3.5% on September 12. This adjustment aimed to provide lower borrowing costs for companies and homebuyers. In contrast, the U.S. Federal Reserve made a significant shift on September 19 by lowering its benchmark interest rate by an unusually large half-point. This decision followed over two years of high rates that had helped control inflation but had also made borrowing notably expensive for American consumers.