07.08.202513:06:46UTC+00Czech National Bank Holds Policy Rate Steady

In July 2025, the Czech National Bank decided to maintain its two-week repo rate at 3.5%, consistent with market expectations, following a 25-basis-point reduction in May. This marks the second consecutive meeting without a rate change. Additionally, the discount and Lombard rates were kept at 2.5% and 4.5%, respectively. Headline inflation decreased to 2.7% year-on-year in July, approaching the upper limit of the 1-percentage-point tolerance band surrounding the 2% target. The central bank expressed a cautious stance, highlighting ongoing upward risks to meeting the inflation objective. Concurrently, preliminary figures indicated a 2.4% year-on-year economic expansion in the second quarter, propelled by household consumption and representing the most rapid growth since the second quarter of 2022. Policymakers suggested that the potential for further rate reductions is limited and suggested that monetary policy is likely to remain stable in the near future. The central bank continues to exercise prudence, closely monitoring inflationary pressures in the services sector and signs of economic recovery later this year.