Michl pointed out that despite the current reduction, interest rates in the coming quarters will be higher than the CNB’s macroeconomic forecast would have predicted. He emphasized that the Bank Board is ready to respond adequately to the eventual fulfillment of the risks of the forecast. They assess these risks as pro-inflationary, in particular the risk of losing the anchoring of inflationary expectations and the impact of changes in indirect taxes on prices.
According to him, the CNB is sure that inflation is heading down, with its next steps it wants to ensure that it will hover around two percent, not around three. “We must remain hawkish in order to deliver our country not three, but two, or slightly below two percent inflation,” he said.
Michl pointed out that despite the current reduction, interest rates in the coming quarters will be higher than the CNB’s macroeconomic forecast would have predicted. He emphasized that the Bank Board is ready to respond adequately to the eventual fulfillment of the risks of the forecast. They assess these risks as pro-inflationary, in particular the risk of losing the anchoring of inflationary expectations and the impact of changes in indirect taxes on prices.
If it becomes clear that not only aggregate, but especially core inflation, which does not include food and fuel, is falling towards the target, the CNB can reduce rates even faster than by a quarter of a percentage point, Michl concluded.
The turning point is here. CNB lowered interest rates
2023-12-21 17:37:27
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