Czech National Bank raises interest rate

The Czech National Bank raised the base interest rate on Thursday by a quarter of a percentage point to 3.75 percent, the highest value since April 2002. The move was caused by inflation which reached 6.5 percent in January; the Bank expects it will keep on rising. Economists say however that the January rise in inflation was a single event and that the inflation should drop to three to four percent during the year. The current rise in inflation has been caused by the increase in the prices of food, oil and other energies as well as rents. Despite the rise, the Czech interest rate is currently the lowest in the European Union.

In related news, the Czech National Bank lowered its estimate of Czech economy growth in 2008 to 4.1 percent. The Bank’s estimate is more pessimistic than that by the Czech Finance Ministry which had previously estimated that the Czech economy will only grow by 4.7 percent.