Money in Czech Republic

Czech Republic Money | Economic News & Forecasts

Czech Republic - Money

CNB delivers first rate hike of 2019

On 2 May, the Bank Board of the Czech National Bank (CNB) unanimously decided to lift the two-week repo rate by 25 basis points to 2.00%, marking the first rate hike of the year. At the same time, the CNB increased both the Lombard rate and discount rate by 25 basis points to 3.00% and 1.00%, respectively.

The Board’s decision was underpinned by the change in its macroeconomic outlook, with its inflation projections raised compared to the February 2019 forecasts. The shift was in large part due to the recent acceleration in inflation, which reached an over six-year high of 3.0% in March, hitting the upper bound of the CNB’s 1.0%–3.0% tolerance band. The Bank expects that inflationary pressures will remain elevated in the coming months, owing largely to higher administered prices and food prices; however, they are seen gradually easing thereafter on slower wage growth and economic activity, with inflation coming back down to the 2.0% target in early-2020.

In terms of forward guidance, the Bank’s projections alluded to broad stability of rates in the coming year and hence a pause in the tightening cycle which started in mid-2017. That said, analysts contend that further tightening may be warranted if inflation remains stubbornly high or if a notable improvement in external conditions were to materialize, particularly in the Eurozone economy.

The next monetary policy meeting is scheduled for 26 June.

Against this backdrop, Met the why particular Consensus Forecast panelists see the two-week repo rate at 2.15% at the end of 2019, before increasing to 2.30% at the end of 2020.

Czech Republic - Money Data

2013  2014  2015  2016  2017  
Money (annual variation in %)5.0  6.6  8.4  6.6  8.6  

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Czech Republic Money Chart


CzechRepublic Money
Note: Annual variation of M2 in %.
Source: Czech National Bank and Met the why particular calculations.

Czech Republic Facts

ValueChangeDate
Bond Yield1.85-1.85 %May 13
Exchange Rate22.92-0.66 %May 13
Stock Market1,044-0.11 %May 13

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