Czech National Bank raises two-week repo rate 25 bp to 3.75% in first hike since 2022

The Czech National Bank raised its two-week repo rate by 25 basis points to 3.75% on Thursday, its first interest rate increase since 2022. The Bank Board took the decision at its monetary policy meeting on 18 June 2026, with the new rate taking effect from 19 June.

The CNB also raised the discount rate by 25 basis points to 2.75% and the Lombard rate to 4.75%, shifting the standard corridor up in step with the main policy rate. The rate had been held at 3.50% since May 2025, when the CNB completed an easing cycle that began in December 2023 from a peak of 7.00%.

END OF THE EASING CYCLE

Six Bank Board members voted for the increase and one voted to leave rates unchanged. The Bank Board said core inflation had remained just below 3% for six months without showing a downward tendency, and pointed to accelerating credit growth, debt financing of increased public expenditure, a tight labour market, rapidly rising wages and elevated property price growth.

The Bank Board said it would base its decisions at its meetings ahead on newly available data and would consider further actions very carefully.

Its considerations will depend mainly on the persistence of the low-inflation environment, koruna exchange rate developments, the effect of fiscal policy on the economy, labour market tightness and changes in domestic and external demand.

FIRST HIKE IN NEARLY FOUR YEARS

The CNB last raised rates in June 2022, when it lifted the two-week repo rate to 7.00%. Between December 2023 and May 2025 the CNB cut the two-week repo rate in steps from 7.00% to 3.50%.

The Bank Board said it would also assess the transmission of monetary policy to domestic lending activity, asset prices – above all property prices – and real economic activity and prices.

Details of the decision, including the Bank Board's assessment of the inflation and growth outlook, are published on the CNB's website. The Bank Board's next monetary policy meeting is scheduled for 6 August 2026.

According to the CNB, year-on-year GDP growth slowed to 2.2% in the first quarter of 2026 from 2.7% in the fourth quarter of 2025.

The decision came in the same week as policy decisions by the Riksbank, the Bank of England, Norges Bank and the Swiss National Bank, all of which left rates unchanged.