The Czech National Bank cut interest rates again by 50bp, bringing the key repo rate down to 5.25%. This time, the decision was unanimous. Inflation has reached the target and the CNB expects it to remain close to 2% throughout the forecast horizon. However, the bank board still favours a slower pace of rate cuts than the CNB staff forecast. This is mainly due to the weaker koruna and the rapid rise in service prices. We expect another 50bp rate cut at each of the next two meetings. By the end of the year, we forecast the repo rate to fall to 3.5%, which should be its terminal level. According to Governor Michl, the majority of the board sees a neutral rate around 3.5%. However, the CNB’s forecast continues to use 3% as the neutral rate, so there has been no change.