Czech Central Bank Lifts Economic Growth Outlook as Currency Firms After Inflation Data

The Czech economy is expected to grow faster this year than previously anticipated, according to updated projections released by the country’s central bank, while the national currency strengthened following the publication of January price figures and a decision to leave borrowing costs unchanged.

In its latest assessment of the domestic economy, the central bank indicated that economic activity should expand at close to three percent this year, representing a more optimistic view than it presented late last year. The revised estimate reflects improving household consumption and a gradual recovery in external demand, while price growth is now seen as more subdued than earlier forecasts suggested. The bank also signalled that economic expansion could remain at a similar pace next year, although inflation is expected to move slightly higher compared with this year’s level.

The updated outlook places the central bank among the more confident forecasters regarding near-term economic performance. Government institutions recently adjusted their own expectations upward as well, though their projections remain marginally more cautious.

Financial markets reacted quickly to the combination of new inflation figures and the monetary authority’s decision to keep its main interest rate steady. The Czech koruna strengthened against both the euro and the US dollar during trading, reflecting investor confidence that price pressures remain under control and that policy settings are unlikely to shift abruptly in the near future.

Data released earlier in the day showed that consumer price growth at the start of the year remained relatively low compared with recent historical standards, even though certain service sectors continue to experience higher costs. Central bank officials reiterated that maintaining a prudent policy stance is still necessary to ensure inflation remains close to the target over the medium term.

Equity trading in Prague moved in the opposite direction, with the main stock index easing from recent highs as several large-capitalisation shares declined. Analysts noted that the currency’s appreciation and stable interest rate environment suggest markets currently view the country’s economic trajectory as balanced, combining moderate growth with contained inflation, although future developments will depend on both domestic spending trends and the broader European economic climate.