# invest in fin markets  8. 11. 2021

The Czech central bank is tightening rates

Ceska koruna

One of the most significant events last week was the aggressive tightening of monetary policy by the Czech Central Bank (CNB). It raised its key interest rate to 2.75% on Thursday, beating even the most aggressive analyst estimates. They estimated an increase in the rate of 50 to 100 basis points. The CNB raised the rate by as much as 125 points, which is the biggest strengthening since 1997. Governor Jiří Rusnok said that further rate increases were likely. The reason for such a sharp increase was the increasing inflationary pressures on the Czech economy. Year-on-year inflation of 4.9% was recorded in September, with fears that imported inflation from abroad is beginning to spill over into the broader consumer basket and could significantly jeopardize the economic situation in the Czech Republic. The inflation forecast for next year is 5.6%, which is the highest inflation in the last 10 years.

The increase in the key interest rate was immediately reflected in the strengthening of the Czech koruna against the euro. It reached the level of 25.34CZK / EUR. Given that the Czech economy is a strongly pro-export economy, a stronger Czech koruna will have a negative impact on the export of goods that will become more expensive for foreign countries. This may lead to weaker economic growth. The growth forecast for the Czech economy has fallen to 1.9%. Higher interest rates will gradually be felt throughout the economy, but they will hit the general population the most in the form of more expensive mortgages.

The Czech Central Bank is not the only one that has had to respond to changes in the economy. We are seeing a gradual tightening of monetary policy in several countries, be it Russia, Poland or the United States. The European Central Bank has stated that it is not planning to raise interest rates or reduce the support program for the purchase of government bonds. However, history shows us that central bankers’ statements can sometimes change very quickly.

Roman Vitásek, CFA
Portfolio manager, IAD Investments

Back to all articles


Are you interested in news from the world of investment? On our blog, our portfolio managers inform you every week about what is happening on the stock markets, you will also find many other interesting topics in the field of investing. Activate notifications for new articles in the blog section and you will never miss investment news again.

Investujte s nami

with us

Today, really anyone can invest, it is important to choose the right partner who will manage the investment.

Investujte na fin trhoch

in fin markets

Verified information on news and the latest topics that affect events in the financial markets.

Investujte do seba

in yourself

Investing in yourself can sometimes be the most lucrative.

This material is a marketing announcement. Before making any investment decision, review the sales prospectus, articles of association and key investor information document for IAD Investments, reports. spol., a.s. (hereinafter referred to as “IAD”) in the Slovak language at the registered office of IAD, at points of sale, at the registered office of the depositary or at www.iad.sk. For more information, contact your financial intermediary or www.iad.sk.

The value of the investment in the mutual fund may also decrease and the return on the amount originally invested is not guaranteed. There is also a risk associated with investing in mutual funds. In accordance with the mutual fund statutes, the share of securities issued by states and international organizations listed in the annex to the statutes of individual mutual funds may exceed 35% of the value of the fund’s assets, which may reach up to 100%. The IAD is obliged to pay out the unit certificate of the Prvý realitný fond and the Korunový realitný fond without delay, but no later than within an extended period of 12 months. Assets in the fund Prvý realitný fond is invested mainly in real estate, including accessories for the purposes of their management and sale, in ownership interests in real estate companies and in liquid financial assets, the economic nature of which results in close links with the real estate market. Korunový realitný fond has at least 85% of its assets continuously invested in the units of the Prvý realitný fond.