A man holds an umbrella in front of the Czech National Bank in Prague, Czech Republic, August 3, 2017. REUTERS/David W Cerny

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  • Tariff decision expected on May 5 at 2:30 p.m. (12:30 p.m. GMT)
  • All 11 analysts see the main rate rising 50 basis points to 5.50%
  • Central bank to issue quarterly economic outlook update
  • Governor’s comments on decision, outlook at 3:45 p.m. (1:45 p.m. GMT)

PRAGUE, May 2 (Reuters) – The Czech National Bank is expected to raise its key policy rate by 50 basis points to 5.50% on May 5, a Reuters poll suggested on Monday, pushing borrowing costs to a record high since 1999 to cope with still- galloping inflation.

The central bank has already raised the two-week repo rate by 425 basis points since June, tightening aggressively to fight inflation which hit a 24-year high of 12.7% in March.

Energy costs were a key driver of inflation, aggravated by Russia’s invasion of Ukraine, and the bank saw strong domestic demand adding to domestic pressure.

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In a Reuters poll, all 11 analysts expected the central bank to hike another 50 basis points on Thursday, matching the rise seen at the end of March.

Some analysts had previously raised the prospect of a 75 basis point hike, but backed off amid more cautious comments from central banks.

Central bank deputy governor Marek Mora said in an April 26 interview with Reuters that the bank faced a dilemma over whether to raise interest rates further as inflation soared. soaring, but as demand was hit by falling real incomes.

Deputy Governor Tomas Nidetzky said last week that he expected there would be some debate between a standard 25 basis point hike or a larger 50 basis point move at the meeting of Thursday.

Board member Tomas Holub told the Bloomberg news agency in an interview last week that a 50 basis point increase was the minimum to consider.

The central bank will announce its decision at 2:30 p.m. (12:30 GMT) on Thursday, followed by a press conference at 3:45 p.m. during which Governor Jiri Rusnok will present a quarterly update of macroeconomic forecasts.

Of the eight analysts who gave the outlook for rates beyond May, four expected rates would peak at 5.50%, while the other four were split on whether another 25 or 50 basis point hike. basis would occur.

Besides interest rates, the bank is expected to continue the debate on whether to deploy some of its large foreign currency reserves to boost the krone and lower import prices. Some central bankers have expressed reservations about such an approach.

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Reporting by Jason Hovet; Written by Robert Muller; Editing by Andrew Heavens

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