Home News How much will the CNB reduce rates? Everything indicates that it will be “just” by half a percentage point

How much will the CNB reduce rates? Everything indicates that it will be “just” by half a percentage point

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How much will the CNB reduce rates?  Everything indicates that it will be “just”  by half a percentage point

The Czech National Bank will cut rates again in the middle, and the only question is how much. After December’s dream of 0.25 percentage point and the norm accelerated to half a percentage point, the pace acceleration was offered. A strong argument is the return of inflation to the two-percent target, when at the moment the eighty-percent annual rate is known to have a restrictive effect. Pesto in indicates that the banking board will repeat the Norwegian decision and the interest rates will only rise by half a point.

The reasons can be found in many places, in addition to the weak exchange rate of the koruna, the structure of inflation itself also plays a role. Under the Norwegian double, the blood is unevenly distributed, in the direction that inflation was helped, especially by the development of food prices. The combination of VAT rates and the pressure on food contributed to the most significant decrease in food prices in the EU. However, a long-term view of the development since the start of the pandemic shows that it is mostly a correction of inflated growth, as Czech Republic has roughly reached the average of EU countries.

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Such a decrease is not likely to affect inflation for a long time, and the development of less volatile components, which can generally be found in services, where, according to the Czech Statistical Institute, prices have grown at a rate of no more than five percent, is therefore essential. Such a ten percent increase against the Polish Norwegian can be traced to catering and accommodation services, strong growth also in recreation and culture. Even after the drop in demand for goods, the willingness to pay for items has remained relatively strong, and consumers are still making up for the pandemic break.

In view of the continued tension in the labor market, inflationary pressures and an increase in annual interest rates are likely to continue in the future, not as the Czech Republic was used to in the previous 15 years.

The May discussion on the neutral rate year will also be interesting, for which the banking council is preparing for a suitable rate year that will not lead to either a positive or a complete slowdown of the economy in the long term. Vtina only stopped the view that the neutral rate should be more than originally expected, or the two set the whistle to deepen the inflated eye. We do not see a return to the era of cheap pensions in the coming years.

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