Czech central bank keeps interest rates at 4%, Capital Economics expects easing cycle to resume By Investing.com

The Czech Central Bank (CNB) kept interest rates at 4.00% on Thursday, pausing a series of recent interest rate cuts, leading Capital Economics to forecast a resumption of the easing cycle, forecasting interest rates to fall to 3.00% by the end of next year. year.

The decision to keep interest rates steady is in line with analyst expectations, including those at Capital Economics. This pause is the first since the Chinese central bank began a series of interest rate cuts totaling 300 basis points since December 2023.

Central bank officials indicated a more cautious approach towards future monetary easing with the interest rate approaching the neutral level of 3.00-3.50%.

Despite the current pause, inflation expectations are positive, with interest rate cuts expected to continue in 2025. Inflation has consistently been within the central bank’s target range of 1.0%-3.0% over the year.

Capital Economics expects this trend to continue next year, resulting in interest rate cuts of an additional 100 basis points spread throughout the year, culminating in a rate of 3.00% by the end of 2025.

The expected policy adjustments are expected to place the Czech Republic among the few emerging markets that will return to a neutral monetary policy stance.

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