The Czech Republic's central bank has announced its sixth consecutive cut to the key interest rate in response to falling inflation and a slower-than-expected economic recovery. The latest cut, as predicted by analysts, reduced the interest rate by a quarter of a percentage point to 4.50%.
This series of rate cuts began on December 21, with subsequent reductions on February 8, March 20, May 2, and June 27. The Czech economy saw a modest year-on-year increase of 0.4% in the second quarter of 2024, with a 0.3% rise compared to the previous three months, according to preliminary data released by the Statistics Office.
Inflation in the country dropped to the central bank's target of 2.0% year-on-year in June, down from 2.6% in May. This move by the Czech central bank aligns with a global trend of central banks considering interest rate cuts to address inflation concerns.
Meanwhile, the European Central Bank opted to maintain its key interest rate benchmark at 3.75% on July 18, following a previous quarter-point cut in June. Federal Reserve Chair Jerome Powell hinted at a potential rate cut by the Fed, noting progress in lowering inflation and a more stable job market that no longer poses a risk of overheating the economy.
Despite this, the Federal Reserve held its key interest rate steady at 5.3%, the highest in 23 years, but indicated that a rate cut in September could be a possibility.
