(Bloomberg) -- The Czech central bank is poised to lower interest rates as policymakers weigh whether to extend the series of reductions by half a percentage point or slow the pace of monetary easing.

Twenty analysts in a Bloomberg survey forecast the rate-setting panel will deliver a 25 basis-point cut on Thursday, which would bring the benchmark rate to 5%, with only five economists predicting a move of 50 basis points.  

Central bankers in Prague have repeatedly said in the past few weeks that the debate will focus on the size of the rate cut, while money market prices indicate that investors are also split on the outcome of the meeting.

“This makes it an extremely close call for the meeting,” Deutsche Bank AG analysts Twisha Roy and Christian Wietoska said in a report. A smaller cut was more likely, although a half-point reduction “should not be ruled out completely,” they said. 

The bank board will assess opposing signals from the economy. Inflation is stabilizing near the 2% target and the koruna is trading at levels stronger than the bank had forecast for this quarter, while price pressures in services persist and wage growth is faster than expected.

Investors have recently scaled down bets on the amount of rate cuts this year, partly due to a more hawkish outlook for the European Central Bank and the US Federal Reserve. Czech money-market prices now imply the benchmark rate at around 4% in December.

Governor Ales Michl said last week that reductions of 50 or 25 basis points are “equally possible” scenarios for him at the June meeting with monetary policy remaining restrictive regardless.

Michl said he personally wouldn’t see a problem if the bank cut by half-point cut in June and then paused to assess the situation before resuming easing if economic data allowed.

“Even if we cut by 50 basis points, we will still send a clear message that rates will be higher for longer,” the governor said. “Future decisions will then be based on incoming data, and we won’t have a problem to halt the easing cycle if we need to.”

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