Czech Rates May Exceed 6% in June, Central Bank Head Rusnok Says

Author of the article: Bloomberg News Peter Laca (Bloomberg) — The Czech central bank will probably need to raise interest rates again next month, possibly above 6%, if new data confirm persistent inflation risks, according to Governor Jiri Rusnok. The Czech National Bank has lifted borrowing costs by a cumulative 550 basis points in eight…
Czech Rates May Exceed 6% in June, Central Bank Head Rusnok Says

Author of the article:

Bloomberg News

Peter Laca

(Bloomberg) — The Czech central bank will probably need to raise interest rates again next month, possibly above 6%, if new data confirm persistent inflation risks, according to Governor Jiri Rusnok.

The Czech National Bank has lifted borrowing costs by a cumulative 550 basis points in eight steps since June last year. The latest move this month brought the benchmark rate to 5.75%, the highest since 1999.

Rusnok said on Sunday that the rate-setting panel will debate how economic data compare with the bank’s latest forecast at the next policy meeting on June 22, which will be his last before his term ends.

There is a “very high” probability that rates will rise again if inflation pressures develop as outlined in the bank’s spring projections, the governor said in a debate on public television. Since the forecast was published, data showed consumer prices growing an annual 14.2% in April, more than the central bank expected. 

When asked whether the benchmark rate will rise above 6% next month, Rusnok said: “It may happen.”

Read more: Koruna Turmoil Shows Dilemma for New Czech Central Bank Boss 

The Czechs are experiencing the fastest inflation in nearly three decades as Russia’s invasion of Ukraine drives up energy and raw-materials prices. While the key manufacturing industry grapples with component shortages and the economy may stall this year as a result, central bankers are concerned about signs that high prices are becoming entrenched.

The Czech monetary outlook has become more clouded after board member Ales Michl, an opponent of the current rapid policy tightening, was appointed as the next central bank governor. Michl said he wants to keep rates stable for “some time” after he takes over in July. The remarks triggered a sell-off of the koruna. 

President Milos Zeman, who has the sole right to pick central bankers, has echoed Michl’s critical views of the tightening. Zeman will decide on three board positions by the end of June, and an additional two by February.

©2022 Bloomberg L.P.

Bloomberg.com

Financial Post Top Stories

Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.

By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300

Read More

Total
0
Shares
Leave a Reply

Your email address will not be published.

Related Posts
Wall Street Banks Win Key Net-Zero Concession a Month Before COP
Read More

Wall Street Banks Win Key Net-Zero Concession a Month Before COP

With roughly a month before COP27, GFANZ says its sub-alliances can set their own rules, with no interference from UN-backed science-based group Author of the article: Bloomberg News Alastair Marsh Smog hangs over Los Angeles on June 11, 2019. Photographer: Mario Tama/Getty Images Photo by Mario Tama /Photographer: Mario Tama/Getty I (Bloomberg) — The world’s…
Canada police in standoff with protesters blocking bridge to U.S.
Read More

Canada police in standoff with protesters blocking bridge to U.S.

Author of the article: Reuters Kayla Tarnowski and Carlos Osorio WINDSOR — A standoff between Canadian police and protesters blocking a key bridge to the United States continued on Saturday, more than seven hours after authorities moved in seeking to end the blockade of the important trade corridor. Demonstrators opposing the government’s strict pandemic restrictions…
China Eastern crash probe eyes intentional action – sources
Read More

China Eastern crash probe eyes intentional action – sources

Author of the article: WASHINGTON — Investigators looking into the crash of a China Eastern Airlines jet are examining whether it was due to intentional action on the flight deck, with no evidence found of a technical malfunction, two people briefed on the matter said. The Wall Street Journal reported earlier on Tuesday that flight…
China to ban online brokers from offering offshore trading to mainland clients -sources
Read More

China to ban online brokers from offering offshore trading to mainland clients -sources

Author of the article: Reuters Julie Zhu and Yu Xie HONG KONG — Chinese regulators are planning to ban online brokerages such as Futu Holdings Ltd and UP Fintech Holding Ltd from offering offshore trading services to mainland clients due to concerns about data security and capital outflows, people with knowledge of the matter said.…