Czech Republic’s Economy Recovers: Central Bank Cuts Interest Rates for Fourth Time in a Row

The Czech Republic’s economy is showing signs of recovery, and its central bank has responded by cutting its key interest rate for the fourth consecutive time. On May 2, 2024, the bank lowered the interest rate by half a percentage point to 5.25%, a move that was anticipated by analysts.

Inflation in the Czech Republic has been steadily decreasing over the past year. In 2023, inflation dropped from 15.1% to 10.7%, and in February of this year, it was reported to be at 2%, which corresponds to the bank’s target. These figures prompted the central bank to continue reducing borrowing costs.

Preliminary data released by the Czech Statistics Office on Tuesday indicated that the Czech economy had grown by 0.4% year-on-year in the first quarter of 2024 and by 0.5% compared to the previous quarter. This growth came after a contraction of 0.2% in the last three months of 2023.

The decision of central banks across the globe to cut interest rates reflects a broader trend as they assess whether inflation has been brought under control. While some central banks like the European Central Bank may cut rates at their next meeting, others like the US Federal Reserve have emphasized their commitment to maintaining current interest rates until they are confident that inflation is stabilizing towards their target of 2%.