Board Voted 6-1 To Keep Interest Rates Unchanged, Gov Michl Pushes Back Against Rate-Cut Bets

The Bank Board voted 6-1 to keep interest rates unchanged and maintain its current FX regime, Czechia's central bank says in a statement as a press conference with Governor Ales Michl started in Prague.

• The statement noted that one policymaker voted for a 25bp rate rise. The main suspect is Tomas Holub, who has been calling for tighter monetary policy. The voting split suggest that the two newest Board members (Jan Prochazka and Jan Kubicek) seemingly voted with the majority led by Governor Ales Michl, as was expected.
• The Bank Board kept a formal hawkish bias, noting that at its next meeting in May it will consider whether to keep interest rates at their current levels or raise them, even as "uncertainty regarding the economic outlook and the future actions of major central banks has risen since the February meeting, partly due to the financial market situation."
• The CNB pushed back against market rate-cut pricing. "The Bank Board still stands ready to raise rates, especially if the risk of a wage-price spiral increases. From this point of view, market expectations that rates have peaked may not materialise. We consider the market expectations regarding the timing of the first decrease in CNB rates to be premature."
• "At the same time, the Bank Board confirmed its determination to continue fighting inflation until it is fully under control, i.e. stabilised at the 2% target. This means interest rates will remain relatively high for some time."
• Click here to see the full statement from the CNB.
• Click here to see the slides from Governor Ales Michl's presentation.