Czech Republic: National Bank Holds Rate as Expected

The Czech National Bank maintained its benchamrk two-week repo rate unchanged at 3.5% in its March 2026 decision, as expected by markets, to stretch the period of holds since the rate cut in May of last year. The Bank Board noted that underlying inflation has been close to the 2% target for over two years now, reflecting the appropriate level for financial conditions. Additionally, the Monetary Department's baseline scenario has headline inflation remain belw 2% this year depending on the eventual normalization of energy prices that have spiked since the start of conflict in the Middle East this month. The CNB noted that the uncertain outlook warrants openess to different policy responses, aligned with the rhetoric of other central banks in Europe.