Inflation in the Czech Republic has slowed to a seven-year low: rate cuts are expected
Inflation in the Czech Republic has slowed to its lowest level in seven years, almost guaranteeing a cut in interest rates at the country's central bank's next meeting, preliminary data from the Czech Statistical Office shows, Bloomberg reports.
In April 2025, consumer prices in the Czech Republic increased by 1.8% year-on-year, significantly below the March figure of 2.7% and below the forecasts of analysts surveyed by the agency.
Amid the news, the Czech koruna weakened against the euro by 0.3%, underperforming the currencies of neighboring countries.
After sharply cutting interest rates last year, the Czech Central Bank went into "stop-start" mode. It paused in December, cut the rate again in February, and left it unchanged in March.
At its meeting on May 7, the country's Central Bank may lower the rate again, although some politicians are emphasizing caution in further easing monetary policy.
The steady increase in prices for services, wages, housing costs, and the budget deficit is a cause for concern.
Some board members also indicated that the next rate cut could be the last in the current easing cycle.
The economic situation in the Czech Republic remains mixed this year. Inflation is being affected by food and fuel prices, and the real estate market is becoming more active.
Consumer demand is gradually recovering after the worst crisis in 30 years, but investment is still lagging behind.
- Europe has almost returned inflation to normal levels. The ECB predicts 2% in the coming months.
- The Eurozone economy grew by 0.4% in the first quarter of 2024, and Germany's by 0.2%, avoiding recession.