The Czech Central Bank continued with the rise in base rates. On Thursday 3 February, a further increase of 0.75 percentage points was approved, to reach a value of 4.5%.
The priority is the return of inflation to the target value of 2%, and the increase in rates will ensure the achievement of this target; this is what was declared by Governor Jiří Rusnok.
According to Rusnok, if the inflation trend is similar to the new estimates by experts, the central bank should no longer resort to sharp rate hikes. It was also indicated earlier this year that a rate hike above 5% would be highly unlikely.
New estimates for GDP were also presented: growth of 3% is expected for the current year and 3.4% next year. Both, however, are worse than the November estimate.
Growing estimates for inflation, which should grow by over 9 percent.
The strong increase in domestic demand and the recovery of foreign trade, however, should drive the growth of the economy. Especially for foreign trade, the Czech Central Bank expects an increase in foreign sales, despite fears related to the strengthening of the Czech crown.
By the end of 2022, economic activities are expected to reach pre-Covid level.
Source: www.cnb.cz
Sources of images: Pixabay.com; Storyset.com
