The Czech National Bank (CNB) is likely to cut interest rates this Thursday by as much as 50 basis points, it is widely forecast.

Most analysts polled by Prague Monitor believed that a combination of low and falling inflation in the country, as well as a dramatic slowdown in the economy will force the CNB to act decisively.

Some analysts believe the cut would be even bigger but for the fact that the Czech currency is now weakening substantially.

A cut of half a percentage point would take the benchmark rate down to 1.75%, its lowest level since 2005.

Most also experts forecast a further gradual lowering of the interest rate this year, with some predicting it will fall as low as 1%.

CNB vice-governor Miroslav Singer said last month that another interest rate cut could well come this month (February) because the economy is threatened by stagnation.

Robin Bowman