Economic policy
This section reports on economic policy initiatives of the Czech government, the EU, and other entities that have a direct impact on the competitiveness of the country. It also includes information on economic priorities of the AmCham and other leading associations.
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Spotlight issue
Inflation will hit 6% and the CNB will soon raise interest rates above 3%
In October, inflation rose again above the expectations of most analysts and the Czech National Bank. The main driver is the cost of housing. Year-on-year core inflation rose above 6%. In December, we expect the CNB's repo rate to increase to 3.25%.
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Inflation accelerates; CNB will raise interest rates again
At its November meeting, the CNB will continue to raise interest rates. We expect them to increase by 50bp, but the risk is higher growth. The tightening of monetary policy is justified by the development of inflation, which we expect to get closer to 6% in October. Industrial production and retail sales should show minor growth in September.
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Industry dropped strongly due to car manufacturers
Industry fell sharply below all estimates in August, mainly due to a drop in car production. Hand in hand with this, the foreign trade balance also deteriorated. Construction output grew slightly. In summary, the published data were worse than expected, and although it is not good to draw strong conclusions from the summer months, supply chain problems appear to continue to weigh heavily on industry.
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