Czech Prime Minister Andrej Babis pressed the Czech National Bank on Monday to cut its policy rate, arguing that borrowers should not face higher costs than those in the euro area. He made the appeal after the central bank left its benchmark at 3.5% unchanged, describing the stance as only moderately restrictive, while inflation risks rise from volatile energy costs.

Babis, a chemicals and agriculture magnate who returned to power last year, highlighted affordable housing as a campaign promise and said lower mortgage rates would boost consumption. Governor Ales Michl warned he will keep rates high if inflation threatens, noting recent energy price spikes and a surge in oil prices have revived tightening expectations. He warned that prolonged high rates could stall growth.

Investors have already priced in a more hawkish outlook, with forward‑rate agreements signalling over 75 basis points of hikes within the next year. The prime minister’s plea adds political pressure, but the central bank maintains its policy independence, refusing to comment on political statements. Market participants will watch upcoming data for clues on whether the bank pivots toward easing. Any shift could affect the Czech koruna and bond yields.