07/05/2025 21:45
As
expected, the Czech National Bank cut interest rates by 25bp today, with the
key repo rate falling to 3.5%. Six of the seven board members voted in favour.
Favourable inflation developments and risks to the economy from US tariffs
contributed to the decision. However, the central bank is optimistic in its new
forecast, predicting GDP growth of around 2% both this year and next. The bank
board continues to highlight inflationary risks. Nevertheless, the CNB staff
forecast points to the repo rate declining to 3% as early as 2Q25. Given the
board’s hawkish communication, we expect more gradual 25bp cuts at both the
August and November meetings, bringing the repo rate to a terminal level of 3%.