Czechia: the hike lands, December does not

CZECHIA - In Brief 06 Nov 2026 by Artur Radziwill

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By Artur Radziwill and Jan HagemejerThe Bank Board raised the two-week repo rate by 25 basis points to 4.00 percent on 5 November, the call we set out at our webinar on 30 October. We expect 4.00 percent to hold on 17 December. The margin is the news The vote was four to three. We had expected the move, though not the margin. Recent decisions have been unanimous or six to one. A one-vote majority delivered at the same meeting that cut the growth forecast confirms our view that this is not a platform for a sequence of hikes, and Governor Michl said so himself: the increase “is not the beginning of a new cycle, but only a fine-tuning of the tightness of monetary policy.” He added that the Board keeps all options open and gave no guidance on December. The minutes, due 13 November, will set out the argument on both sides and may add clarity on the path ahead. The CNB forecast confirms stagflationary pressures The third-quarter GDP flash of 30 October showed growth of 0.5 percent on the quarter and 1.6 percent on the year, down from 1.8 and the slowest annual rate since the third quarter of 2024. The 4 November inflation flash put the headline rate at 2.4 percent year on year, the first slowdown since June. Food and non-alcoholic beverages fell 4.0 percent, services rose 4.5 percent, and energy, including motor fuel, rose 5.6 percent (under the retail fuel price cap and the diesel excise remission that will expire on 30 November), with the index excluding energy, food, alcohol and tobacco at 3.3 percent. The CNB forecast published alongside the rate decision puts numbers on the stagflationary pressures. Growth for 2026 was cut to 1.7 percent from 2.2 percent, and 2027 to 2....