Weaker Germany, domestic demand factors for potential easing
Services prices may be new inflation hotbed
Inflation likely to breach 3 in December before drop in 2025

PRAGUE, Oct 24 Reuters The Czech National Bank can continue easing monetary policy amid weaker growth abroad and a slow domestic demand recovery, but must be mindful of inflation hotspots, especially in the services sector, ratesetter Jan Prochazka said.

The central bank has cut its main rate by 275 basis points since December, taking it to 4.25. It opted for 25 basispoint reductions at its past two meetings, smaller than previous ones.

Markets expect another cut at its next meeting on Nov. 7, when the bank will also assess an updated economic outlook. Weaker growth in Germany and lower euro zone market rates were likely to push some forecasts lower, Prochazka said.

For 2025, we have a GDP forecast of 2.8 growth, which is above potential, and I simply don39;t think growth will be that high, he said in an interview on Wednesday.

He said a bad mood remained among consumers, which was seen in the retail sector, but that people should not be concerned that a recession is coming.

With consumer demand still sluggish after the inflation surge of recent years, the Czech economy grew 0.6 yearonyear in the second quarter and the central bank forecasts a 1.2 rise in 2024 as a whole.

On the inflationary side, service sector prices continue to rise at around a 5 pace, keeping overall inflation above the 2…