Czech inflation rate falls to ten-year low, but energy crisis clouds limit central bank's rate-cut path

Golden Ten Data reported on March 4 that the Czech Republic's inflation rate unexpectedly slowed further in February, but an energy shock triggered by the Iran war may limit the central bank's room to resume interest rate cuts. According to preliminary estimates released by the Czech Statistical Office on Wednesday, consumer prices rose by 1.4% year-on-year, marking the lowest growth rate since 2016. This figure is below the median expectation of 1.6% in the survey and also lower than the central bank's own forecast for the month. Although the central bank's board discussed the possibility of so-called "fine-tuning" rate cuts last month, the surge in global energy prices and the weakening of Eastern European currencies following the US and Israel's attacks on Iran over the weekend are likely to change the inflation outlook. Since the last rate cut in May last year, policymakers have kept the benchmark interest rate unchanged at 3.5%.