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PRAGUE: The Czech National Bank is set to raise its main rate by 50 basis points to 5.00% on March 31, a Reuters poll showed on Tuesday, which would be the highest since 2001 as policymakers battle an inflation surge exacerbated by the Ukraine war.

The central bank has raised its two-week repo rate by 425 basis points since June, tightening aggressively to tackle inflation that hit a 24-year high of 11.1% in February. Price pressures are still building, spurred on by rising energy costs following the Ukraine conflict.

A Reuters poll showed most analysts expected the central bank to deliver one more big interest rate increase when it meets on Thursday, and only a few predicted borrowing costs would rise again later this year.

Nine out of the 12 analysts polled predicted an increase of 50 basis points this week and two expected a rise of 25 basis points. One expected no change.

Of the six respondents giving an outlook beyond March, three forecast the main rate would peak at 5.50% this year. In a January poll, only one forecast rates would rise above 5%.

The central bank will announce its decision at 2:30 p.m. (1230 GMT) on Thursday, followed by a news conference at 3:45 p.m. where Governor Jiri Rusnok will comment on the vote.

Prior to Russia’s Feb. 24 invasion of Ukraine, which Moscow calls a “special military operation”, central bankers thought it unlikely rates would climb above 5%. But opinions have changed.

Board member Tomas Holub told Reuters last week that he expected to be in the camp favouring a larger rather than smaller move at Thursday’s meeting, but also said he was open to debate about raising to 5.00% now and further in May.

Vice-Governor Marek Mora said that he saw rates going “well above” 5%.

The central bank may also debate using its large international reserves, which stood at about 64% of gross domestic product in February, to fight inflation and not just as a tool to stabilise exchange rate fluctuations.

The bank announced on March 4 it had intervened in markets after the crown had weakened sharply with other currencies in central Europe amid the fallout from the Ukraine conflict.

Holub said this month he would prefer to tighten monetary policy through rates rather than currency interventions.

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