The Czech National Bank (CNB) maintained its interest rate at 4% during its board meeting on December 19, aligning with market expectations. This decision marks a pause in the one-year trend of rate reductions, which had seen rates decrease from 7% since last December.
CNB Governor Ales Michl stated, "The process of disinflation is not over," emphasizing the need to stabilize inflation around the bank's 2% target. November's inflation rate held steady at 2.8%, up from 2.6% in September.
During the meeting, five central bankers supported the decision to keep rates unchanged, while two advocated for a 0.25 basis point reduction, citing weaker economic conditions abroad that might affect the Czech economy.
Looking ahead, Michl noted that the board is considering its options for the next monetary policy meeting in February, with potential decisions to either maintain the 4% rate or reduce it slightly.
The CNB also reported that the country's GDP grew by 1.3% in the third quarter, primarily driven by household consumption, although foreign demand remains weak, contributing to low investment activity.
Market analysts anticipate that the CNB may resume interest rate cuts next year, although opinions differ on the timing. An analyst from Akcenta consultancy mentioned that fluctuations in the koruna could influence the pace of future rate changes.