Czech Central Bank Cuts Rates to 3.5% as Inflation Drops to Seven-Year Low

Hungary's consumer price growth slowed to an annual rate of 4.2% in April, slightly above expectations and nearing the upper limit of the central bank's tolerance band, with core inflation remaining elevated at 5%. Meanwhile, the Czech Republic's central bank cut its key interest rate by a quarter percentage point to 3.50% amid inflation falling to 1.8%, the lowest in seven years and below the 2% target, signaling cautious optimism for economic growth. This rate cut continues a trend of easing that began in late 2023, although policymakers remain wary of global trade uncertainties, particularly potential U.S. tariff impacts, which could affect the Czech economy. Analysts suggest the Czech central bank may pause further easing due to persistent price pressures and external risks, balancing the need to support domestic growth while managing inflation. The European Central Bank also recently lowered its benchmark rate, while the U.S. Federal Reserve is expected to hold rates steady despite political pressures to cut borrowing costs. Overall, Central European monetary policy is navigating a complex environment of slowing inflation and geopolitical uncertainty, leading to cautious adjustments in interest rates.