Czech National Bank lowers interest rates by 0.75 percentage points

The Czech National Bank has surprised analysts by lowering the benchmark interest rate by three quarters of a percentage point – far more than the expected cut of one quarter of a percentage point. Thursday’s decision was influenced by subsiding inflation and fears of an economic downturn in the wake of the global financial crisis. At 2.75 percent, the Czech Republic’s key interest rate is the lowest in the whole of the European Union. The last time the central bank intervened so strongly was in 2002, when it cut rates from 3.75 percent to 3 percent.

The Czech National Bank has also revised its prediction of growth in the Czech economy next year, from 3.6 percent to 2.9 percent.