The Czech National Bank rose interest rates, including the 2-week repo rate which it set 25 basis points higher at 1.75 percent. At the same time, the bank’s monetary council increased the Lombard rate to 2.75 percent. The new rates take effect today. Five of the council’s seven members voted in favor of the rate hike, said CNB governor Jiří Rusnok. Today’s rate rise should be enough for this year so long as things go as our predictions assume. The bank’s decision was widely expected, as there are multiple signs of an overheating economy, including rising wages, surprisingly high inflation and the weakness of the koruna. It’s the fifth time this year the bank has raised rates, which haven’t been this high since 2009. The bank’s strategy does appear to be having a growing impact on the real estate market. Not only are interest rates on mortgages rising, but sales appear to have slowed down over the summer and prices for new apartments are suddenly stagnant.
