MNI CNB Review - Sep 2025: Holding Pattern

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Executive Summary

• The Bank Board unanimously decided to keep interest rates on hold.
• Risk balance was inflationary, but CZK strength provided some counterweight.
• Governor Michl left all options open for future meetings.

The Czech National Bank (CNB) kept the two-week repo rate unchanged at 3.50% in a well-telegraphed, unanimous decision, citing concern about ongoing domestic inflation pressures. The outcome was guided by a situation report, which showed that inflation was poised to hover above the central bank’s +2% Y/Y point-target for the remainder of this year amid continued core price stickiness. The tone of the press conference was broadly familiar, with Governor Michl leaving all options open for future meetings and refusing to provide clear forward guidance. Strong koruna appreciation was identified as one of the reasons for leaving both cuts and hikes on the table, with the Governor denying the existence of any pain threshold.