The CNB will discuss the setting of interest rates, analysts expect their reduction

Commercial presentation Update: 2/05/2024 00:25
Issued by: 2/05/2024, 00:03

Prague – The Banking Council of the Czech National Bank (ČNB) will decide today on the next setting of interest rates. Analysts contacted by ČTK expect that it will continue to reduce them, which it started last December. They mostly expect a drop in the base interest rate by half a percentage point, but they do not rule out the possibility of a half step. Currently the prime rate is 5.75 percent, a cut would take it to its lowest level since early May 2022.

The Banking Council began cutting rates in December after keeping the key interest rate at seven percent for a year and a half. First, it reduced it by 0.25 percentage points, then in February and March by 0.5 percentage points. “The Central Bank will probably cut rates again on Thursday by half a percentage point, but this time, even with March inflation at the two percent target, an acceleration of the rate drop is out of the question due to changes in expectations for a slower rate drop abroad,” said Jakub Seidler, chief economist of the Czech Banking Association.

Today, the CNB will also present a new macroeconomic forecast, on the basis of which it decided on the next rate setting. Analysts assume that, against the February prediction, the central bank will increase the gross domestic product (GDP) growth estimate, lower the inflation estimate and adjust the forecast of the average exchange rate of the koruna to weaker values.

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