Czech National Bank Cuts Interest Rate to 3.50%

The Czech National Bank cut its main interest rate by 25 basis points to 3.5%, a decision supported by most analysts and seen as potentially the final move in its current easing cycle. While headline inflation has slowed sharply, dropping below the bank's 2% target for the first time since 2018, policymakers remain cautious due to persistent inflationary pressures from services and wage growth. The board voted 6-1 in favor of the cut, with concerns about modestly inflationary risks to the bank's target. Analysts expect the bank may now pause further cuts, given ongoing global trade uncertainties and the potential for slower economic growth. The central bank's latest forecast anticipates a modest decline in rates followed by broad stability. The Czech economy has continued to recover, led by household consumption, though outlooks may be tempered by recent U.S. tariff increases.