New Governor of the Czech Central Bank Pledges to Fight Runaway Inflation

Published: 18.07.2022 Related countries:  Czech Republic Czech Republic

The new governor is known for his opposition to interest hikes.

The Czech central bank’s new governor promised to pursue its goal of price stability as investors are waiting to see how the new management will tackle the fastest inflation in three decades.

In a statement published on his first day in office, Ales Michl said he wanted to achieve “low and stable” consumer price growth and “maintain confidence in the value of the Czech koruna.” He didn’t comment on the potential use of interest rates or other monetary-policy tools.

Michl’s surprise appointment in mid-May spurred an initial sharp koruna depreciation and prompted the central bank to intervene in the market because he had voted against the bank’s sharp interest-rate increases since last June. 

Czech president Milos Zeman said he picked Michl because of his opposition to the rate hikes and he later made three more appointments, replacing board members who have backed the aggressive monetary-tightening campaign.

With full responsibility, I pledge to pursue the Czech National Bank’s two primary objectives: price stability and financial stability,” Michl said in the statement. “The priority will be to reduce inflation."

He said the bank will “hold a dialogue” with the government about wider economic policy needed for sound macroeconomic environment.

Delivered by CzechTrade team Canada
Source: Bloomberg News