Czech National Bank Holds Interest Rates Steady

2025-11-06 13:30 By Dongting Liu 1 min. read

The Czech National Bank left its two-week repo rate unchanged at 3.5% in November 2025, in line with market expectations, marking a fourth straight pause as an easing cycle lost steam amid inflationary pressures from services and wages.

Headline inflation rose to 2.5% in October, above forecasts but still within the CNB’s 2% ±1 percentage point target range, while service-sector inflation remained elevated at 4.6%, and wages continued to rise in a rebounding economy.

GDP expanded 2.7% year-on-year in Q3, the fastest pace since Q2 2022.

The Finance Ministry upgraded its forecasts to 2.4% for 2025 and 2.2% for 2026, citing stronger-than-expected wage growth.

The newly elected government has signaled plans for increased fiscal spending, though detailed measures are yet to be unveiled.

Against this backdrop, the CNB maintained a cautious, wait-and-see approach, balancing inflationary risks with the need for clarity on the government’s fiscal trajectory.



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Czech National Bank Leaves Interest Rates Steady
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Czech Central Bank Holds Rates
The Czech National Bank kept its two-week repo rate unchanged at 3.5% in December 2025, in line with market expectations, amid softer-than-expected inflation and prospects of further disinflation in 2026. The government recently approved measures to lower electricity bills for households and companies, a move that could push inflation below the 2% target next year while leaving more disposable income that may fuel services inflation. Governor Aleš Michl has avoided signaling a clear medium-term rate path, reiterating that all options remain open. Several board members, however, have indicated that borrowing costs could remain unchanged throughout next year.
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Czech National Bank Holds Interest Rates Steady
The Czech National Bank left its two-week repo rate unchanged at 3.5% in November 2025, in line with market expectations, marking a fourth straight pause as an easing cycle lost steam amid inflationary pressures from services and wages. Headline inflation rose to 2.5% in October, above forecasts but still within the CNB’s 2% ±1 percentage point target range, while service-sector inflation remained elevated at 4.6%, and wages continued to rise in a rebounding economy. GDP expanded 2.7% year-on-year in Q3, the fastest pace since Q2 2022. The Finance Ministry upgraded its forecasts to 2.4% for 2025 and 2.2% for 2026, citing stronger-than-expected wage growth. The newly elected government has signaled plans for increased fiscal spending, though detailed measures are yet to be unveiled. Against this backdrop, the CNB maintained a cautious, wait-and-see approach, balancing inflationary risks with the need for clarity on the government’s fiscal trajectory.
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