Governor Michl Sees No Reason To Speculate About Timing Of Rate Cut

The Czech National Bank released the text of a speech delivered by Governor Ales Michl to members of the Czech Banking Association. In the address dated June 15, the Governor reaffirmed that "inflation is finally falling" and said that it should fall into single-digit territory within two months.

• Michl emphasised that ongoing disinflation "is not a victory" and the central bank will need to make sure that price pressures continue to ease in 2H2023. He reiterated that "interest rates will therefore remain high for a longer period of time," while "there is no point in speculating about when they will be lowered."
• The Governor made a reference to the previous monetary policy meeting when policymakers voted 4-3 to keep rates unchanged, noting that "some members of the Bank Board are still considering whether to raise rates further."
• Michl said that "the historically strongest koruna together with the highest interest rates since 1999 created the tightest monetary conditions in the last more than 20 years in the first quarter of 2023" and "we want it to stay that way for some time."
• Interestingly, the speech was published after the CNB's blackout period began on Wednesday. The central bank's general approach is not to comment on monetary policy issues one week before the Bank Board meeting.