The Czech central bank took a step back from Europe’s most aggressive campaign of interest-rate increases as global risks to the export-oriented economy overshadow domestic price pressures.
After raising borrowing costs last month for the eighth time in two years, the central bank left the benchmark rate at 2 percent on Wednesday, in line with expectations. Policy makers have earlier signalled about a year of stable monetary policy and said the next move could be up or down.
This more cautious approach reflects the shifting mood across the globe as it tries to weigh concerns about the economy prompt major central banks to reassess their plans. The European Central Bank has delayed its exit from euro-area stimulus. The US Federal Reserve stepped back from raising rates further and investors are now betting on a cut there.
While inflation unexpectedly accelerated in May toward the top of the central bank’s 1 percent-3 percent tolerance band, Governor Jiri Rusnok said two weeks ago that the jump was driven mainly by volatile food prices. He said there was no reason to react.