Czech National Bank cuts interest rates to record low level

The board of the Czech National Bank (CNB) Thursday cut interest rates to record-low levels with the main interest rate, influencing the rates of commercial loans, dropping by 0.2 percentage points to 0.05 percent. CNB spokesperson Tomas Zimmermann said central bankers also cut other interest rates. The Lombard rate fell by 0.5 percentage points to 0.25 percent. The Lombard rate is a percentage rate charged to commercial banks by the CNB for collateralised loan obligations. The discount rate, which influences penalties for unpaid loans and taxes, decreased to 0.05 percent. The Czech central bank also slashed interest rates at its last monetary policy meeting on Sept. 27. The benchmark two-week repo rate fell to 0.25 percent then. The Czech Republic's interest rates are among the lowest in the region. The main interest rate of the European Central Bank, which is valid for all eurozone member states including the Czech Republic's neighbor Slovakia, is 0.75 percent. Poland has its main rate at 4.75 percent and Hungary at 6.5 percent. Interest rates of the central bank influence the rates of bank deposits and loans. Lower rates make operating and investment loans for companies as well as household housing loans cheaper.