Page 20 - CE Outlook Regions 2024

Although the trend is expected to continue for some time, Czechia’s export-oriented economy will also face challenges from stagnating European economies, particularly Germany.
2.1.3 Inflation and monetary policy
The Czech National Bank (CNB) lowered the interest rate by 0.25pp at its final board meeting of 2023 in December, breaking away from its policy of maintaining the interest rate at 7% from June 2022. The move has been long argued for by local analysts and the CNB said it will remain cautious about any further changes in interest rates.
The CNB also acknowledged that despite easing inflation (to 7.3% y/y in November) it expects it to remain above the CNB’s target level of 2% in 2024. The EC projects inflation for 2023 to be 12.2%, and for 2024 to be 3.2% and for 2025 to be 2.4%. The Czech Ministry of Finance expects the austerity package to raise inflation by 0.1 pp in 2024.
The much sought easing of inflation could take place over a longer stretch than just in 2024.
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