(Bloomberg) – According to Governor Jerry Rusnok, if new data confirms the continued inflationary risk, the Czech central bank may have to raise interest rates again next month, possibly above 6%.
The Czech National Bank has raised borrowing costs by 550 basis points, rising eightfold since June last year. The latest move this month brings the benchmark rate to 5.75%, the highest since 1999.
Rusnok said on Sunday that the rate-setting panel would debate how the economic data compares to the bank’s latest forecast at its next policy meeting on June 22, which will expire before its expiration date.
There is a “very high” possibility that if inflationary pressures develop as the outline of the bank’s spring forecasts, rates will rise again, the governor said in a debate on public television. Since the forecast was released, data showed that consumer prices rose 14.2% year on year in April, exceeding the central bank’s expectations.
Asked if the benchmark rate would rise above 6% next month, Rusnok said: “It could happen.”
Read more: New check shows Coruna unrest for Central Bank boss
The Czechs are facing the fastest inflation in almost three decades as Russia’s aggression in Ukraine has pushed up fuel and raw material prices. Although the core manufacturing industry has been hit by a shortage of components and as a result the economy may stagnate this year, central bankers are concerned about signs that higher prices are closing in.
The Czech financial outlook has become even more cloudy since the appointment of Alice Mickle, a member of the opposition board to the current fast-paced policy tightening, as the next central bank governor. Michelle says she wants to keep rates stable “for a while” after taking office in July. The comment triggers the sale of Corona.
President Milos Zeman, who has the sole right to choose central bankers, echoed Mitchell’s critical views on the restrictions. Zeman will decide on three board positions by the end of June and two additional positions by February.
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