Zamrazilova Says Risk Of Wage-Price Spiral Is Not Acute

In her presentation on "Inflation in the Czech economy: returning to the target" CNB Deputy Governor Eva Zamrazilova said that a loose fiscal policy and tight labour market remain the main hawkish risks but there isn't an "acute risk" of a wage-price spiral at the moment.

• The Deputy Governor mentioned the following domestic and global pro-inflationary factors:
  • Shortages of raw materials and components (global) - fading away
  • Loose long-term monetary policy (global, partially domestic) - fading away
  • Deglobalisation - persistent
  • Loose fiscal policy (global and domestic) - partially fading away
  • Pressures from the labour market (domestic) - partially fading away
  • Rising energy prices (global) - fading away
• The official reiterated that interest rates are the main instrument of monetary policy, but some companies borrow chiefly in foreign currencies, escaping the influence of domestic rate hikes. Therefore, the exchange rate is a key tool to tighten monetary conditions for these companies.
• Zamrazilova's full presentation [in Czech] is available here.