Central bank says risk of accelerating inflation remains high

According to the Board of the Czech National Bank, there is still a risk of accelerating inflation in the Czech Republic, especially given the growth in the price of services and the rising costs of real estate and rents in Czechia.

Governor Aleš Michl also identified an increase in the state budget deficit as a risk that could lead to an acceleration in inflation. On Tuesday, the lower house of Parliament approved an amendment to this year's budget that increases the deficit by CZK 30 billion to CZK 282 billion. In August, annual inflation was 2.2 percent.

Last week, six of the seven members of the bank's board backed a quarter percentage point cut in the key interest rate to 4.25 per cent.