Czech central bank raises interest rate and cuts economic growth forecasts

The Czech National Bank raised its key interest rate by a quarter of a percentage point to four percent on Thursday, its highest level since early 2025. It also downgraded its economic outlook, forecasting GDP growth of 1.7 percent this year, down from its August estimate of 2.2 percent. Growth next year is now projected at 2.5 percent instead of 2.7 percent. The bank expects inflation to average 2.1 percent this year before accelerating to 3.2 percent next year, considerably higher than previously forecast. Higher interest rates generally mean more expensive borrowing but better returns on savings.