Crown firms in wake of rate hike

The Czech crown firmed to a six-week high after the central bank announced another hike in interest rates on Wednesday. The crown was trading at 25.152 per euro on Thursday, up from 25.225 before the announcement.

The Board of the Czech National Bank on Wednesday increased the two-week repo rate  by one percentage point to 3.75%. At the same time, it increased the discount rate by the same amount to 2.75% and the Lombard rate to 4.75%. The new interest rate levels come into effect on 23 December 2021.

The base rate is currently at its highest level in 13 years. It is the third above-standard increase in the base rate by more than 0.25 percentage points in a row and unlikely to be the last. Governor Jiří Rusnok said that in view of the soaring inflation, which is expected to reach 7 percent in January,   the key interest rate is likely to rise well above four percent.