MNI CNB Review - Feb 2025: Unanimous Hawkish Cut

Executive Summary:

• The Bank Board reduced the key rate by 25bp to 3.75%.
• The Board’s decision was unanimous.
• Communications accompanying the decision were rather cautious.

Click here to see the full review: MNI CNB Review - February 2025.pdf

All seven members of the Bank Board of the Czech National Bank (CNB) backed the decision to reduce the two-week repo rate by 25bp to 3.75%. The panel judged that short-term inflation risks are not materialising, while subdued external demand is creating a drag on domestic economy. However, the decision was framed as a “hawkish cut”, with the Bank Board still intending to keep the policy rate above historical levels. This is supported by the assessment that the balance of risks to the fulfilment of the CNB mandate is slightly inflationary, warranting caution going forward.