Prague - The Czech Republic's central bank Thursday slashed the country's key rate to a historic low in an effort to boost borrowing and revive the country's ailing economy.

The Czech National Bank reduced the benchmark two-week repo rate by 25 basis points to 1.25 per cent, in its first cut since May 7.

The Central European country of 10.3 million was largely spared the meltdown on world financial markets, but falling demand in Western Europe has hurt the export-reliant economy.

The latest cut brought the main Czech rate closer to that in the 16 countries using the euro, where the benchmark rate remains at an all time low of 1 per cent.(dpa)