Bank Board Member Frait Does Not Rule Out Further Rate Hikes

Seznam Zpravy runs an interview with CNB policymaker Jan Frait who refuses to rule out further interest-rate hikes, which will mostly depend on the trajectory of Fed tightening.

• Frait expects inflation to start falling towards single digits in the second half of 2023, with the reaction of major central bank constituting a "big unknown." There is no reason to expect that high inflation will stay for a long time.
• He sees signs that the Fed and ECB might back down, which could put Czechia in a difficult situation. If the global monetary conditions are not tight enough, inflationary pressures may persist. This could force the CNB to considering a resumption of the rate-hike cycle.
• The macroeconomic situation is difficult due to the ongoing war in Ukraine and the weaponisation of energy prices. The Czech economy is subject to risks that come primarily from abroad. In addition, Europe is facing the prospect of continued deindustrialisation.
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