PRAGUE, May 7 (Xinhua) -- The Czech National Bank (CNB) on Thursday lowered key interest rates due to a new macroeconomic forecast, the central bank said in a statement.

The Bank Board of the CNB reduced the two-week repo rate by 75 basis points to 0.25 percent and the Lombard rate to 1 percent, the bank said.

In its new forecast, the CNB predicts a marked decline in world economic performance through the year a well as a sharp fall of economic activities in the euro area in the first half of the year.

The CNB said that even with the lifting of movement and business restrictions, economic activities for 2020 will not rebound to pre-pandemic levels and the economy will instead contract significantly. Unemployment is also expected to rise sharply.

In addition, the central bank predicts that the coronavirus will have an anti-inflationary effect on consumer prices and could help return the country's inflation rate to its 2 percent goal, though food prices will likely continue to rise.

The bank is also preparing emergency instruments to provide liquidity to non-banking entities in the case of an emergency, the statement added. Enditem

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