Investing.com -- The Czech central bank has maintained a cautious stance towards further easing of interest rates, according to Vice-Governor Jan Frait. The bank’s decision is influenced by the tight labor market conditions and potential risks arising from anticipated increases in European defense spending. Frait’s comments were reported by the news website seznamzpravy.cz.

Despite the global turmoil that has occurred since Frait’s January forecast, his prediction that the main rate would slightly decrease to 3.5% in the second half of the year still holds. "The number 3.5% is a nice number, and although markets now expect it will be somewhat less also due to panic in financial markets, it gives a solid base for further thoughts," Frait said.

The last adjustment to the main rate by the Czech central bank was a 25 basis point cut to 3.75% in February. This cautious approach by the bank indicates a preference for stability in the face of potential economic uncertainties.

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