BankingBrief
Czech National Bank raises its two-week repo rate to 4 per cent
The quarter-point rise came with a new forecast that puts inflation at 3.2 per cent in 2027 and cuts 2026 growth to 1.7 per cent.
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The Czech National Bank raised its main policy rate, the two-week repo rate, by 0.25 percentage points to 4.00 per cent at its meeting on 5 November, the central bank said, with the new rates in force from 6 November.
The discount rate rose by the same amount to 3.00 per cent, and the Lombard rate now stands at 5.00 per cent. The Bank Board judged the risks to the inflation target to be on the inflationary side, the bank said in its summary of the decision. The meeting was listed in the week ahead of 2 November.
The new forecast has headline inflation at 2.1 per cent this year and 3.2 per cent in 2027, 0.7 percentage points higher than in the previous forecast, before it falls to 2.3 per cent in 2028. Inflation will rise to just below 4 per cent at the start of next year and return close to the 2 per cent target in early 2028, the bank said.
The bank cut its growth forecast for 2026 by 0.5 percentage points to 1.7 per cent and expects 2.5 per cent in both 2027 and 2028. It now sees average nominal wages rising 6.2 per cent this year, 1.1 percentage points less than before, and 5.9 per cent in 2027. The forecast puts three-month PRIBOR at an average of 3.9 per cent in 2026, 4.1 per cent in 2027 and 3.6 per cent in 2028, and the koruna close to CZK 24.3 per euro this year.
Headline inflation was 2.4 per cent in October on a preliminary estimate, down from 2.5 per cent in September and inside the 1 to 3 per cent tolerance band, while core inflation was 3.1 per cent in September, Trading Economics reported. For the country’s banks, a higher rate path follows nine-month results such as Komerční banka’s CZK 13.2 billion net profit. In Budapest, the Hungarian central bank held its base rate at 5.50 per cent in October.
The CNB published the introductory part of its Autumn 2026 Monetary Policy Report on 6 November and scheduled the full report for 13 November. The Bank Board’s last monetary policy meeting of the year is on 17 December, according to its calendar of decisions.