Analysts expect Czech National Bank to halt interest rate cuts on Thursday

The board of the Czech National Bank (CNB) will on Thursday likely halt the easing of the monetary policy that it began a year ago, and leave the base interest rate at 4%, according to analysts interviewed by ČTK. According to them, a reduction in interest rates would benefit the Czech economic recovery, but the board will proceed cautiously, given the persistently high inflation in the services sector.

"The increasingly poor outlook for the performance of the domestic economy, the relatively strong exchange rate of the crown, falling expected interest rates in the eurozone and generally favorable inflation data from recent months all speak in favour of reducing rates," said Vít Hradil, chief economist at Cyrrus, to ČTK. However, Mr. Hradil noted that public statements from some members of the board indicate the CNB is increasingly of the opinion that it would not be harmful to suspend the process of easing its monetary policy.