(Bloomberg) -- The Czech Republic is poised to cut interest rates by another half of a percentage point, but a nascent economic recovery and sticky inflation may slow monetary easing in the following months.

The central bank will probably lower its benchmark to 5.25% on Thursday from 5.75%, according to all economists in a Bloomberg survey, maintaining the size of cuts from the previous two policy meetings. Money-market prices show investors are split between those betting on a half-point cut and a quarter-point reduction.

Policymakers in Prague are weighing the pace of easing after two years of economic stagnation helped bring inflation down to their 2% target in the first quarter from a peak of 18% in 2022. They have recently warned that rising prices for services, a housing-market recovery and hawkish signals from the US Federal Reserve are all reasons to keep relatively restrictive conditions at home.

Last month, Governor Ales Michl said Czech officials “will remain hawks” to prevent a resurgence of inflation, while Vice Governor Eva Zamrazilova told a magazine she was considering a cut by 25 or 50 basis points in May. Board members Jan Prochazka and Tomas Holub both signaled their support for a 50-basis point reduction, after Holub unsuccessfully sought a 75 basis-point step in March.

“The common denominator of those comments is that further monetary policy easing must be done with caution and a rate cut by 50 basis points appears to be the best option,” said Jana Steckerova, an economist at Komercni Banka AS.

The policy announcement is scheduled for 2:30 p.m. in Prague. Michl is expected to brief the press and comment on the updated staff forecast from 3:45 p.m.

Over the past two months, investors have significantly scaled back bets on the total magnitude of Czech easing, following a similar shift in the US and the euro area. Money-market prices now imply the central bank will switch to 25 basis-point rate cuts from June and end the cycle at around 4% next year.

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