MNI CNB Review - Aug 2025: Easing Cycle Virtually Over, But

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Executive Summary:

• The Bank Board unanimously decided to keep interest rates on hold.
• Domestic inflation pressures were assessed to preclude a further decrease in rates.
• Forecast revisions were hawkish, with 3-month PRIBOR path adjusted higher.

The Bank Board’s meeting yielded a widely expected unanimous decision to keep interest rates on hold amid resurging inflationary pressures from the domestic economy, breaking with its stop-and-go approach to monetary easing. Although Governor Aleš Michl left all options on the table for future meetings, he explicitly described his message as ‘hawkish’, while the Board’s guidance emphasised that current conditions preclude any further rate cuts. The decision was accompanied by notably hawkish forecast revisions, reflecting the incorporation of materialising risks and expert adjustments into the model. We expect the CNB to remain wary of further monetary easing going forward and think that near-term rate stability is quite likely.