Thursday, the Czech National bank reduced its key policy rate by 25 basis points to 1.5%. In March, the central bank had kept the two-week repo rate unchanged at 1.75%. Economists had expected the central bank to hold the interest rate.

The central bank also reduced its discount rate to 0.50% and Lombard rate to 2.50%. The new interest rates will be effective from May 11.

In latest data from the Czech economy, the GDP dropped 0.9% sequentially in the fourth quarter, in contrast to a 0.3% rise recorded in the previous quarter. The consumer price index or CPI rose 2.3% year-over-year in March, larger than the 2% increase in the previous month.

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