CNB cuts interest rates

Rate reduction of 25 basis points: 2W repo rate 1.25%, discount rate 0.25%, Lombard rate 2.25%

The CNB Bank Board decided at its meeting today to lower the two-week repo rate by 25 basis points to 1.25%. The discount rate was cut to 0.25% and the Lombard rate was lowered to 2.25%. The new interest rate levels come into effect on 7th August 2009.

This is the lowest level of monetary policy rates in the history of the Czech Republic.

The history of settings of main instruments of monetary policy and Bank Board minutes available at

https://www.cnb.cz/en/monetary-policy/instruments/#mpi
/en/monetary-policy/bank-board-decisions/index.html

Repo rate: The CNB’s key monetary policy rate, paid on commercial banks’ excess liquidity as withdrawn by the CNB in two-week repo tenders.

Discount rate: A monetary policy rate which as a rule represents the floor for short-term money market interest rates. The CNB applies it to the excess liquidity which banks deposit with the CNB overnight under the deposit facility.

Lombard rate: A monetary policy interest rate which provides a ceiling for short-term interest rates on the money market. The CNB applies it to the liquidity which it provides to banks overnight under the lending facility.

Marek Petruš, CNB spokesman