A woman walks outside the czech central bank in Prague, Czech Republic, on Nov. 2, 2023. On Thursday Feb. 8, 2024, the Czech Republic's central bank cut its key interest rate for the second straight time in efforts to help the country's struggling economy. The cut by a half percentage point brought the interest rate down to 6.25%. (AP Photo/Petr David Josek/File)
People stand outside the czech central bank in Prague, Czech Republic, on Nov. 2, 2023. On Thursday Feb. 8, 2024, the Czech Republic's central bank cut its key interest rate for the second straight time in efforts to help the country's struggling economy. The cut by a half percentage point brought the interest rate down to 6.25%. (AP Photo/Petr David Josek/File)PRAGUE (AP) — The Czech Republic’s central bank cut its key interest rate for the second straight time Thursday in an effort to help the struggling economy.
The cut by a half-percentage point brought the interest rate down to 6.25%. The bank also trimmed borrowing costs by a quarter-point on Dec. 21, which marked the first cut since June 22, 2022.
Between 2021 and 2022, the bank unleashed a series of rate hikes to try to combat soaring inflation. The last hike of 1.25 percentage points took the rate to 7%, the highest level since early 1999.
The Czech economy contracted by 0.2% in the last three months of 2023 compared with a year earlier.
Inflation declined to 10.7% in 2023 from 15.1% in 2022, according to the Czech Statistics Office, which is still well above the bank’s 2% target.
The Czech bank's decision comes as major central banks around the world are discussing when to start bringing down borrowing costs. The European Central Bank left its benchmark rate unchanged at a record-high 4% on Jan. 25, saying it was premature to discuss cuts.
Last week, the U.S. Federal Reserve kept its benchmark interest rate steady, indicating that it needed to see more evidence that inflation is truly in check before making cuts. The Bank of England said similar that same week.
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