Czech central bank again increases key interest rate

PRAGUE (AP) — The Czech Republic’s central bank has again aggressively moved to increase its key interest rate in a continuing effort to tame soaring inflation.

The 1 percentage point hike Wednesday to 3.75% was the fifth straight increase since June and was higher than expected by analysts. The bank, which considers high consumer prices a major threat, also had indicated it would raise the rate.

Inflation jumped to 6% in November, the highest level in 13 years and well above the bank’s target of 2% target.

Banks controlling monetary policy worldwide have started shifting their focus from stimulating the coronavirus-battered economy to combating soaring consumer prices that arrived during the recovery. Last week, the Bank of England became the first in a major advanced economy to raise interest rates since the pandemic began. Others, including the European Central Bank and U.S. Federal Reserve, are moving to exit pandemic-related economic stimulus.

In the Czech Republic, the last time the central bank changed its rates was Nov. 4, when it increased the key interest rate by a point and a quarter to 2.75%.

It was the first such move under the new government led by conservative Prime Minister Petr Fiala, which was sworn in last week. The previous Cabinet of populist Prime Minister Andrej Babis protested the increases, saying they harm an economy that has been recovering from the coronavirus pandemic.

The Czech economy recorded growth of 2.8% in the third quarter, compared to the same period a year ago.