The Czech National Bank raised its benchmark two-week repo rate by 25bps to 1.75 percent on November 1st 2018, as widely expected. The move follows a 25bps hike in the September meeting and leaves the interest rate at its highest level since May 2009. Also, the lombard rate and the discount rate were increased by 25bps to 2.75 percent and to 0.75 percent, respectively. The annual inflation rate fell to 2.3 percent in September from 2.5 percent in August, still pressures remain strong driven by buoyant wage growth. Inflation is projected to rose further early next year and will approach to the central bank’s target of 2 percent in late 2019 and beginning of 2020. In the short term, inflation pressures are expected to ease amid growth in interest rates, renewed appreciation of the currency and a slowdown in wage growth. The Committee noted that the economy growth slowed and it is projected to stay above 3 percent on average this year and in the following two years. Interest Rate in Czech Republic averaged 4.89 percent from 1995 until 2018, reaching an all time high of 39 percent in June of 1997 and a record low of 0.05 percent in November of 2012.
Interest Rate in Czech Republic is expected to be 1.75 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Interest Rate in Czech Republic to stand at 2.00 in 12 months time. In the long-term, the Czech Republic Interest Rate is projected to trend around 2.50 percent in 2020, according to our econometric models.