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Czech c. bank significantly ups rate as inflation soars

Banking

Photo by V_E/Shutterstock.com

The Czech Republic's central bank has significantly increased its key interest rate by three-quarters of a point to 1.50%, in an effort to tame soaring inflation as the economy rebounds from the coronavirus pandemic.

Thursday's move was the biggest single hike of the rate since 1997 and the third increase in as many months. Analysts had mostly predicted a half-point increase.

The Czech National Bank considers high inflation as a major threat. Inflation jumped to 4.1% in August, well above the bank's 2% target.

The country's economy registered a record 8.1% year-on-year growth in the second quarter, according to the Prague-based Statistics Office.

The Lombard rate was also raised by 75 bps to 2.5%, while the discount rate increased to 0.5% from 0.05%.

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