The Czech National Bank kept its two-week repo rate unchanged at 3.5% in August 2025, in line with market expectations, marking a third consecutive pause. The discount and Lombard rates were also left steady at 2.5% and 4.5%, respectively. The economy expanded 2.6% year-on-year in Q2, driven primarily by domestic demand, with strong household spending supported by rapid nominal wage growth. Headline inflation slowed to 2.5% year-on-year in August, the lowest in three months, remaining within the CNB’s 2% target ±1 percentage point tolerance band. However, core inflation rose to 2.8%, just below the upper limit of the band. Inflation is expected to stay in the upper half of the tolerance range for the remainder of the year. The Bank Board signaled that a relatively tight monetary policy remains necessary to keep inflation near the 2% target over the long term.