Central bank raises interest rates

The Czech central bank has moved to increase interest rates for the first time since 2008. At its meeting on Thursday the bank’s board decided to raise the two-week repo rate by 20 basis points to 0.25%. At the same time, it decided to increase the Lombard rate by 25 basis points to 0.50% and to keep the discount rate unchanged at 0.05%. The new interest rate levels come into effect on 4 August 2017. Interest rates are now the main tool for the central bank to adjust the economy after dropping the low crown policy in April.

The Czech central bank also upgraded its economic growth forecast for 2017 from 2.9 to 3.6 percent. It likewise upgraded next year’s forecast from 2.8 to 3.2 percent. Its growth forecast for 2019 is 3.1 percent.