Holub & Kubelkova Voted For 25bp Rate Hike Last Week

The minutes of the Czech National Bank's most recent monetary policy meeting showed that the two hawkish dissenters who called for a 25bp rate hike were Tomas Holub and Karina Kubelkova. This means that Jan Prochazka dropped his rate-hike call from the May meeting and returned to the on-hold camp.

• The minutes note that the Bank Board "meeting opened with a presentation of the fourth situation report based on an assessment of the information obtained since the spring forecast was drawn up." The summary of the risks to the inflation forecast prepared by the Monetary Department's staff can be found here.
• Policymakers showed some concern over the impact of fiscal policy on inflation, which is seen as inflationary in the short term. Jan Frait and Jan Prochazka said that "the final extent of the fiscal consolidation currently under discussion as uncertain," while Karina Kubelkova and Tomas Holub said that the expected changes to indirect taxes may be pro-inflationary in the short term. However, fiscal consolidation measures are expected to be anti-inflationary in the longer run.
• Regarding the future interest-rate path, Ales Michl and Jan Frait said that another rate hike cannot be ruled out if other central banks continue to tighten policy and domestic inflation proves persistent. Eva Zamrazilova said that it wold be too soon to discuss lowering rates now, while Jan Prochazka warned that premature easing would need to be reversed next year.
• Notabley, "according to Tomáš Holub, this meeting was the last chance to raise rates in this inflation episode, then the only viable strategy would be to keep them “higher for longer”, which, however, he regarded as suboptimal as regards the extent and timing of the decline in inflation." This means that we may see a further dovish shift in the vote split at the next meeting.
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