Czech central bank raises interest rate again
PRAGUE (AP) — The Czech Republic’s central bank raised its key rate again in a bid to tackle soaring inflation, echoing a hike the Bank of England also took on Thursday.
The three-quarter point rise to 4.5% was the sixth consecutive rise since June, and analysts had expected it. The bank, which sees high consumer prices as a major threat, had also indicated it would raise the rate. He is now at the highest level since January 2002.
Fueled by high energy prices, inflation jumped to 6.6% in November, well above the bank’s 2% target. The bank expected it to continue to grow at the start of the year.
The bank’s decision comes after the Bureau of Statistics estimated that the country’s economy grew by 3.3% last year, more than expected, after contracting 5.8% the previous year. due to the coronavirus pandemic.
The Czech bank’s stance contrasts sharply with that of the European Central Bank, which on Thursday decided to leave its major economic stimulus programs in place and said it was unlikely to raise interest rates this year as it views inflation as temporary. He thinks inflation will drop sharply this year and fall to 1.8% in 2023 and 2024.
Additionally, the US Federal Reserve has signaled that it may begin a series of rate hikes as early as March. Annual US consumer inflation hit 7% in December, a 40-year high.
In the Czech Republic, the last time the central bank changed its rates dates back to December 22, when it raised the key rate by one point to 3.75%.
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