At the 23-year high, the Czech base rate

The Czech central bank has raised the key interest rate from 5 percent to 5.75 percent. The interest rate corridor was also pushed up 0.75 percentage points, raising its bottom to 4.75 percent and its top to 6.75 percent.

The Czech central bank has raised the base rate from 5 per cent to 5.75 per cent, the bank’s spokeswoman Markéta Fischerová said on Thursday. The base rate is now the highest since 1999.

His decision to raise interest rates was justified by rising inflation in the Czech Republic and the effects of the war in Ukraine.

In the Czech Republic, annual inflation rose to 12.7 percent in March, compared with 11.1 percent in February. The Czech consumer price index is now the highest since May 1998, when it was 13 percent.

The central bank raised the key interest rate by more than 0.25 percentage points for the sixth time in a row, before that there was a 0.5 percentage point increase at the end of March. Some financial analysts were surprised by the 0.75 percentage point increase, as most of them expected only a 0.5 percentage point tightening this time around. General analysts believe that another increase in the base rate will further increase the cost of corporate and retail bank loans and investments.

The Czech central bank also raised Lombard interest rates by 0.75 percentage points to 6.75 percent (this is the top of the interest rate corridor) and increased the discount rate to 4.75 percent (this is the bottom of the interest rate corridor).

Interest rate hikes have been criticized by several in the past: both former Prime Minister Andrej Babis and President Milos Zeman believed that the central bank’s current interest rate policy was damaging the Czech economy. According to Jirí Rusnok, the governor of the Czech National Bank, the criticisms are unfounded.

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