This decision comes at a time when major central banks worldwide are debating when to start reducing borrowing costs
The Czech Republic’s central bank has once again cut interest rates to support the economy as inflation falls.
The bank reduced the rate for the third time in a row, bringing it down to 5.75%. The bank began reducing borrowing costs in Dec.ember, 2023, marking the first cut since June 22, 2022. It followed this with another half-percentage point cut in February of this year.
According to the Czech Statistics Office, inflation fell from 15.1% in 2022 to 10.7% in 2023 and dropped to 2% year-on-year in February, matching the bank’s target. The Czech economy shrank by 0.2% in the last three months of 2023 compared to the same period a year earlier.
This decision by the Czech bank comes at a time when major central banks worldwide are debating when to start reducing borrowing costs. Central banks around the world, including the U. S. Federal Reserve, are trying to determine if inflation has been controlled enough to begin cutting rates.
This would make it cheaper for consumers and businesses to borrow, spend, and invest. On March 7, the European Central Bank kept its key interest rate at a record high of 4%, and ECB President Christine Lagarde hinted that a much-anticipated cut to borrowing costs would likely be delayed until June.
In the United States, economists generally predict that the first rate cut by the Federal Reserve will also happen in June.
