The Bank Board of the Czech National Bank left interest rates unchanged today. The primary interest rate, on which the interest rate on commercial loans is derived, remains at 0.25 percent. Central Bank spokeswoman Markéta Fišerová informed about it. According to economists, rates can rise due to the latest economic developments and the uncertainty surrounding the pandemic during the second half of the year. According to the CNB, uncertain developments around the pandemic could delay the rise in interest rates.
At the previous monetary meeting on February 4, the board left interest rates unchanged unanimously. The Council last changed rates last May 7, when it reduced the key interest rate by 0.75 percentage point to 0.25 percent. Earlier, the council cut interest rates twice in March. The aim was to mitigate the economic impact of the spread of coronavirus.
“The stability of interest rates is not surprising news. It is a good decision in a situation where the economy is burdened by closures and uncertainties related to the pandemic,” said Radomír Jáč, chief economist at Generali Investments CEE. He added that the stability of rates had been indicated in recent weeks by members of the Bank Board, with interest rates rising in the second half of this year at the earliest. The current February forecast of the central bank indicated an increase in interest rates since the second quarter.
“Premature increases in interest rates are currently a much greater risk than rising by one or two quarters. The adverse effects on business and household economies may be delayed. Gradually recover, “said Martin Gürtler, an economist at Komerční banka. He thus expects the first rate hike in November.
Interest on bank deposits and loans is derived from central bank rates. Businesses have higher interest rates on investment and operating loans and more expensive housing loans on households.
All seven members attended the Bank Board meeting. The press conference after the meeting of the Board will begin at 3:45 pm, with CNB Governor Jiří Rusnok and Vice Governor Tomáš Nidetzký announcing the reasons for today’s decision.
