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Czech central bank sharply increases its key rate to 2.75%

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PRAGUE (AP) — The Czech Republic’s central bank has again sharply increased its key interest rate by a point and a quarter to 2.75%, to tackle soaring inflation amid the economy’s recovery from the coronavirus pandemic.

Thursday’s surprising move was the biggest single hike of the rate since 1997 and the fourth straight increase since June.

Analysts had mostly predicted a half-point or a three-quarter point increase. The central bank considers high inflation as a major threat.

Inflation jumped to 4.9% in September, well above the bank’s 2% target.

The last time the bank changed its rates was Sept 30, when it increased the key interest rate by three quarters of a point to 1.5% in an effort to tame inflation.

The government protested, saying it would harm the economy.

The Czech economy registered a 2.8% year-on-year growth in the third quarter, according to the country’s Statistics Office.

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