PRAGUE (Reuters) – The Czech National Bank raised its main rate by 75 basis points on Thursday, an even heftier policy tightening than markets and analysts had expected, delivering its biggest hike since 1997 as inflation soars.

After the increase, 1.50% is the repo rate for the next two weeks. This level was the highest since March 2020, when central banks lowered their rates in support of an economy that had been hit hard by the COVID-19 pandemic.

A Reuters poll revealed that all eight economists expected a 50-basis point increase, which was also what several central banksers indicated in public remarks.

Governor Jiri Rusnok would be commenting on the decision during a conference at 3:45 pm (1345 GMT) where he’ll also discuss the board’s assessment of macroeconomic risks.

After the announcement, the crown rose by 0.5%.

Some economists decried the necessity of significant tightening. They claimed that high inflation (which rose to 4.1% in August) was due to global increases in energy prices and supply disruptions. These factors are beyond the control of the central bank.

This situation was not expected to improve, according to the top global central bankers.

In fear that tightening monetary policy might harm the recovery of the Czech economy, it has asked rate-setters to not raise rates.

Along with Hungary, the Czech central banking is the only European Union institution to have initiated the tightening cycle. However, the latter slow down its pace by raising its main rate last week by a lower than expected 15 basis points.