Czech Central Bank Hikes Key Rate to 4%

2026-11-05 13:37 By Larissa Caser 1 min. read

The Czech National Bank raised its repo rate by 25 basis points to 4% at its November 2026 meeting, as expected, marking the highest level in borrowing costs since early 2025.

Headline inflation eased slightly to 2.4% in October from 2.5% in September, according to preliminary estimates.

However, strong domestic demand, higher energy prices and food costs continue to pose upside risks.

Although inflation remains within the CNB’s 1%-3% tolerance range, it is expected to peak at an average of 3.5% in the first quarter of 2027 and then resume its decline.

With price stability remaining the central bank’s priority, core inflation also remains a concern, having reached 3.1% in September, above the upper end of its tolerance range.

The CNB raised its inflation forecast to 2.1% for 2026 and 3.2% for 2027, while lowering its 2028 projection to 2.3%.

Meanwhile, GDP growth is expected to slow to 1.7%, down from the previous 2.2% forecast, before recovering to 2.5% in both 2027 and 2028.



News Stream
Czech Central Bank Hikes Key Rate to 4%
The Czech National Bank raised its repo rate by 25 basis points to 4% at its November 2026 meeting, as expected, marking the highest level in borrowing costs since early 2025. Headline inflation eased slightly to 2.4% in October from 2.5% in September, according to preliminary estimates. However, strong domestic demand, higher energy prices and food costs continue to pose upside risks. Although inflation remains within the CNB’s 1%-3% tolerance range, it is expected to peak at an average of 3.5% in the first quarter of 2027 and then resume its decline. With price stability remaining the central bank’s priority, core inflation also remains a concern, having reached 3.1% in September, above the upper end of its tolerance range. The CNB raised its inflation forecast to 2.1% for 2026 and 3.2% for 2027, while lowering its 2028 projection to 2.3%. Meanwhile, GDP growth is expected to slow to 1.7%, down from the previous 2.2% forecast, before recovering to 2.5% in both 2027 and 2028.
2026-11-05
Czech Central Bank Extends Rate Pause
The Czech National Bank unanimously decided to maintain its two-week repo rate unchanged at 3.75% in September 2026, as expected, pausing for a second straight meeting. Although the annual inflation rate remained below the central bank's target at 1.9% in August, the “elevated” outlook for 2027 warranted “increased caution in monetary policy.” Policymakers cited several sources of inflationary pressure, including resilient domestic demand, strong wage growth, robust credit expansion and an expansionary fiscal stance, partly offset by falling food prices, which are expected to pick up in the coming months. The base effect from energy subsidies is also expected to turn less favourable. Moreover, the fallout from the Iran conflict and elevated energy prices continued to pose significant risks to the inflation outlook. Looking forward, Governor Ales Michl said the Board will likely consider keeping rates steady or raising them at its November meeting.
2026-09-17
Czech National Bank Leaves Key Rate Unchanged
The Czech National Bank left its two-week repo rate unchanged at 3.75% in August 2026, pausing after delivering its first interest rate hike since 2022 at the previous meeting. Although headline inflation remained below target for most of the year, policymakers said underlying inflationary pressures persisted, with core inflation remaining elevated and requiring a sufficiently restrictive monetary policy stance. Meanwhile, economic growth slowed to 2% in the second quarter from 2.2%, while the labor market remained tight. The bank also noted that strong credit growth and debt-financed public spending continued to boost money supply. Policymakers raised their inflation forecast, projecting inflation to average 2% this year before accelerating to 2.5% in 2027, while lowering this year's growth forecast to 2.2% from 2.5%. Looking ahead, the CNB said future policy decisions would depend on incoming data, the economic outlook, inflationary risks, and the effects of monetary policy.
2026-08-06