FX.co ★ Czech National Bank Reduces Interest Rates

In May 2025, the Czech National Bank reduced its two-week repo rate to 3.5%, following a period of two months where it remained at 3.75%, as anticipated. Concurrently, the discount rate was lowered to 2.50%, and the Lombard rate was adjusted to 4.50%. This decision was influenced by the decline in inflation to 1.8% in April, marking the lowest point since March 2018. Furthermore, the appreciation of the krona—a peak not seen against the euro since June, and since June 2023 against the dollar—afforded the central bank the flexibility to implement these rate cuts. This adjustment mirrors the ongoing trend of the European Central Bank and aims to maintain the competitiveness of Czech enterprises. Additionally, the emerging risk posed by US tariffs to economic growth supports a shift toward a more stimulative monetary policy.