The Czech National Bank has sharply increased its key interest rate by a point and a quarter to 2.75% from 1.5%, to tackle soaring inflation amid the economy’s recovery from the coronavirus pandemic. Inflation exceeded 4% in August. That’s twice the central bank’s target level. Today's move is the highest one-off rate increase in nearly a quarter century ans surprised analysts' which expected a half-point or a three-quarter point increase. At their last meeting two months prior, the board raised rates by only 0.25% pts. Bank board minutes show four members backed that move, one sought a 0.5% pts rise, and two voted to leave rates unchanged. Czech National Bank governor Jiří Rusnok said that the rise in key interest rates would not have been so significant if the Czech government’s budgetary policy had not been so expansive.
EURCZK fell sharply following the central bank announcement, however sellers failed to break below lower limit of the triangle formation. Source: xStation5
