Czech Republic Doubles Interest Rates to 1.5%

By: The Quinnipiac University Economics Research Team, Nicholas Ciampanelli

As the Czech Republic’s economy continues rebounding from the economic impacts of the COVID-19 pandemic, the inflation rate has significantly increased over the past few months – rising by approximately 4%. In response to this phenomenon, the Czech National Bank approved raising key interest rates (those applied to mortgages and commercial loans) by 0.75% points. This increase will be this the largest change to Slovakian interest rates since 1997, raising the policy rates to 1.5%.

The decision was made in response to unexpected changes to the price of goods, particularly the cost of food, housing, and services. Increasing the nation’s interest rates can reduce the number of investments made by households and firms, thereby slowing these price changes. As the National Bank further manages these economic changes, interest rates are anticipated to rise to 2% by the end of the year.

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