The Czech central bank has decided to raise the countercyclical capital buffer rate for banks to 1.75%, effective Jan. 1, 2020.

The regulator noted that the Czech economy has moved further into the growth phase of the financial cycle and that the banking sector's vulnerability to an economic downturn has increased.

Ceská národní banka previously said the rate would rise to 1.25% from Jan. 1, 2019, and to 1.5% from July 1, 2019, with the current applicable rate being 1%.

"The bank board's decision to increase the countercyclical capital buffer means that the CNB's macroprudential and monetary policies are currently acting in one direction," Governor Jiří Rusnok said. "This is helping to maintain the stability of the Czech economy and its financial sector."