The Czech National Bank kept its two-week repo rate unchanged at 3.50% following the June 2025 meeting of the Bank Board, with all members voting in favour of the hold. The unanimous decision came one meeting after the board had lowered rates in May 2025.
BANK BOARD ASSESSMENT
The Bank Board said that keeping inflation near the 2% target in the long term still required relatively tight monetary policy.
SPRING FORECAST AND RISKS
The June decision was underpinned by the CNB's spring (May) 2025 macroeconomic forecast, which was consistent with a decline in interest rates in the second quarter of 2025 and with rates then approaching the long-run neutral level of around 3%, and by an assessment of information obtained since the forecast was prepared. The Bank Board assessed the risks to the inflation outlook as inflationary overall, citing inertia in services and food inflation, a possible stronger recovery in lending, public spending and rapid wage growth, while a downturn in global and German activity was the main anti-inflationary risk; escalating trade wars and the wars in Ukraine and the Middle East were listed as uncertainties.