The Board of the Czech National Bank raised interest rates by 25bps. The two-week-repo-rate increased to 2.75%. The interest rate hike was widely expected, although we estimated the result would be a close vote – which it was. The hike is a reaction of the CNB to current indications of inflationary pressures building in the economy, which appeared in the recent macroeconomic data. There is growing domestic demand supported by increasing wages and a fall-off in the unemployment rate – all of which pushes prices up. The weak koruna exchange rate also works to be slightly pro-inflationary.