Savers in the Czech Republic have been enjoying relatively high returns on their deposits, with interest rates on savings accounts currently exceeding five to six percent. However, this favorable situation may soon undergo a transformation, contingent on the decision of the central bank. It is expected that interest rates will decrease next year, marking a significant shift in the financial landscape.

Max Bank presently offers the highest interest rates at an attractive 6.01 percent, with Komerční Banka and UniCredit Bank offering competitive rates close behind. However, it’s important to note that potential customers are often required to fulfill specific criteria, such as maintaining regular savings habits or making a certain number of card payments in physical or online stores. Failure to meet these requirements could result in a substantial reduction in interest rates.

This stability in high-interest rates has persisted for several months, with banks such as Fio Banka, Raiffeisenbank, and others maintaining their deposit account rates for over a year. Changes in interest rates typically only occur in exceptional circumstances. For instance, Raiffeisenbank recently lowered the main rate on its Hit Plus account from 5.5 to 5.2 percent since the last comparison in May.

The current rate stability can be attributed to the policy of the Czech National Bank (ČNB). The ČNB’s decisions regarding the repo rate, one of its three key rates, significantly influence interest rates on savings and loan products. In response to mounting inflation, which surged to 18 percent, the ČNB increased the repo rate to seven percent. This rate has remained unchanged ever since.

Nonetheless, inflation has been on a gradual decline, with a year-on-year rate of 6.9 percent in September. The ČNB predicts that inflation will reach two percent next year, though some economists anticipate it could even surpass that figure.

The future direction of interest rates is still uncertain. Jakub Heřmánek from Fio Banka suggests that the ČNB might decide to reduce rates due to declining inflation, which could, in turn, lead to a decrease in interest rates offered by individual banks. The magnitude of rate reductions for mortgages and savings accounts will depend on potential rate cuts by the central bank and changes in the competitive landscape. Patrik Madle from ČSOB shared similar views.

The following table summarizes the current offers from various Czech banks:

This overview illustrates the competitive landscape in the Czech Republic, with various banks vying to attract customers with attractive interest rates, though the imminent changes signaled by the central bank’s policy decisions will likely impact the savings market in the near future.

Article by Prague Forum