Czech National Bank raises interest rates to a twenty-year high

The board of the Czech National Bank has announced another significant increase in interest rates. The base rate will rise by 0.75 percent to a total of 4.5 percent, the highest level seen in the Czech Republic since January 2002. Five members of the board were in favor of raising rates, while two wanted to keep them the same. The majority decision is an attempt to combat inflation, which the Bank expects to rise to 9.2 percent in January and head even closer to double digits in February. Increased interest rates from the National Bank will likely result in increased rates for commercial loans for individuals and companies.

The Czech Republic and Poland have agreed a deal to bring the dispute over Turów coal mine to a close after years of arguments. The deal was announced by Czech Prime Minister Petr Fiala and Polish leader Mateusz Morawiecki in Prague today. The agreement involves the construction of a groundwater barrier to protect water supplies on the Czech side of the border, the building of a wall to prevent dust and noise reaching Czech territory, regular inspections by Czech authorities, and compensation of 45 million euros to be paid by Poland to the Czech Republic. 35 million of this sum will go to the Liberec region for the construction of necessary infrastructure to ensure continued drinking water access.

Czechs are spending more by card than this time last year, according to new data from Česká spořitelna. The bank says card transactions, including withdrawals from ATMs, rose by 23 percent year-on-year last week. The level of card transactions was eighteen percent higher than in the pre-pandemic era. Spending was particularly high in pharmacies, with a forty percent increase in card payments recorded compared to the same period in 2020. Significantly more is also being spent on food and electronics than before the pandemic. Ten percent less is being spent on accommodation services, though.

Former Health Minister Adam Vojtěch, who led the Czech Republic through much of its pandemic response, will become the Czech ambassador to Finland later this month. The appointment was confirmed today by the Foreign Ministry. The possibility of Vojtěch becoming ambassador to Finland was first discussed at the beginning of 2021, when Andrej Babiš's government approved a list of new Czech ambassadors.

Polish Prime Minister Mateusz Morawiecki is coming to Prague today to discuss bilateral cooperation with his Czech counterpart Petr Fiala. The Czech government announced the visit this morning, amid unofficial claims a deal may have been reached on the disputed Turów coal mine near the Czech border.

A press conference is scheduled for 13:00. Last month, Fiala claimed an agreement on Turów could be reached in the coming weeks. An international dispute broke out over the mine when Poland decided to prolong operations at the mine, to the anger of local Czechs who argue it is severely damaging the local environment.

The Czech women’s hockey team beat host nation China in their first match at the Beijing Winter Olympics. The first ever appearance by a Czech women’s hockey team at the Winter Olympics saw them triumph with a final score of 3:1. Goals were scored by Tereza Radová, Denisa Křížová and Michaela Pejzlová.

The team’s next game in Group B will be against Sweden on Saturday. The performance of the team in their first game suggests promising things to come; the Czechs led from the eleventh minute, doubling their lead thirteen minutes later. China then took the score to 2:1, before the Czechs made victory certain with another goal in the final period.

Prague’s University Hospital in Bulovka has initiated a new sealed intensive care unit for the hospitalization of patients with contagious diseases. This is the fourth so-called BioBox in the hospital, but the first fully equipped for intensive care. It comes with devices for artificial lung ventilation, dialysis and other life-saving procedures.

The BioBox cost CZK 23 million to create. It’s the only facility of its kind in the Czech Republic. It might be assumed that the facility is intended to care for Covid-infected patients; but the hospital actually wants to use it for those with dangerous diseases from abroad, such as hemorrhagic fever, Ebola or pulmonary plague. It will also be used for diseases found in the Czech Republic, such as legionella and meningitis. When a patient is admitted the BioBox becomes vacuum sealed, with no air flowing out of the room. It has its own air conditioning and wastewater sterilization equipment, while medics tending to patients must wear spacesuit-like sealed protective clothing.

The board of the Czech National Bank (ČNB) are meeting today to discuss a possible interest rate raise and to agree a new macroeconomic forecast. Economists expect interest rates to increase by another 0.75 percent, taking the base interest rate to 4.5 percent, the highest level since January 2002.

The bank has been rapidly raising the base interest rate to combat rising inflation. In November, the ČNB predicted average inflation of 5.6 percent in 2022, but it has since admitted inflation could go even higher. The current base interest rate of 3.75 percent is the highest since the global financial crisis of 2008.

The EU approved its controversial new energy taxonomy yesterday, including the decision to name nuclear and gas projects “green” investments as long as they meet certain criteria. The move has generated controversy, including in the Czech Republic where conditions for nuclear projects were initially deemed harsh and unrealistic.

But the CEO of Czech energy conglomerate ČEZ, Daniel Beneš, praised the taxonomy, saying it moves the EU in a positive direction which will allow the Czech Republic to transition towards an emissions-free economy. His comments came after the EU relaxed its deadlines for giving the “green” label to gas developments.