PRAGUE (AP) – The Czech Republic’s central bank cut its key interest rate for the second straight time on Thursday in an effort to help the struggling economy.
The cut by a half-percentage point brought the interest rate down to 6.25 per cent. The bank also trimmed borrowing costs by a quarter-point on December 21, which marked the first cut since June 22, 2022.
Between 2021 and 2022, the bank unleashed a series of rate hikes to try to combat soaring inflation. The last hike of 1.25 percentage points took the rate to seven per cent, the highest level since early 1999.
The Czech economy contracted by 0.2 per cent in the last three months of 2023 compared with a year earlier.
Inflation declined to 10.7 per cent in 2023 from 15.1 per cent in 2022, according to the Czech Statistics Office, which is still well above the bank’s two per cent target.
The Czech bank’s decision comes as major central banks around the world are discussing when to start bringing down borrowing costs. The European Central Bank left its benchmark rate unchanged at a record-high four per cent on January 25, saying it was premature to discuss cuts.
