Czech National Bank Deputy Governor Eva Zamrazilova said monetary policy will need to remain restrictive for longer to contain inflation risks.
- “We don’t expect high inflation outside the tolerance band next year, but to meet the inflation target, we must have monetary policy at least slightly restrictive, which is the level where we are now,”
- “It’s now only very slightly restrictive at 3.5%.”
The central bank has kept its benchmark rate steady at 3.5% over the last two meetings after beginning an easing cycle in late 2023. While policymakers remain open to future moves, they are worried about surging housing prices, stubborn service-sector inflation, and faster wage growth that could fuel consumer demand.
Zamrazilova noted that policy is now only “very slightly restrictive” and that this stance must be maintained to reach the inflation target. Although a stronger koruna is limiting import costs and lower energy prices are helping for now, both supports may prove temporary.
Info comes via a Bloomberg (gated) report.
Supportive for CZK, could weigh on EUR/CZK carry trades. The Czechs are amidst preparations to adopt the euro.
