Guvernér – Zvyšování sazeb ještě neskončilo

Interview of the CNB Governor Jiří Rusnok By Krystof Chamonikolas, Peter Laca (Bloomberg 14. 12. 2021)

The Czech central bank, which was among the world’s first to challenge the view that inflation was transitory, must continue its rapid interest-rate increases to keep consumer prices under control, Governor Jiri Rusnok said.

Policy makers have to act decisively to cool the economy after households and companies started anticipating inflation exceeding the central bank’s target, Rusnok said in an interview on Monday.

“We can’t accept that and do nothing,” he said. “We have to actively manage these expectations, and make it clear that we’ll do everything to return inflation to the target, because that’s our mandate. The credibility of inflation targeting can’t be achieved with only rhetoric.”

He signaled the bank may extend hikes by at least another full percentage point in total before rates will peak next year. The koruna gained.

Along with Hungary, the Czechs became the European Union’s front-runners in raising borrowing costs in June. Since then, inflation has jumped to its fastest in 13 years, exacerbated by broken supply chains and more costly raw materials. At the same time, rate setters in Prague are tackling home-grown pressures fueled by a severe labor shortage and spiraling property prices.

After lifting rates by cumulative 2.5 percentage points over the past six months to 2.75%, another move by more than half-point may be needed on Dec. 22, according to Rusnok. That would follow an increase by 1.25 percentage points last month, the biggest single hike in 24 years.

“I’d like it if we could proceed at a standard pace, and I still consider even half a percentage point as a standard move, but I understand the situation could require at least one larger step than that,” he said. “With the nature of our inflation pressures, it seems that we’ll need to bring rates above the neutral level, and that they will eventually be closer to 4% than 3% next year.”

The koruna extended gains after Rusnok’s comments, appreciating as much as 0.2% against the euro. It traded 0.1% stronger at 25.37 as of 10:24 a.m., outperforming regional peers.

The last time the benchmark reached 3.75% was in 2008, and it hasn’t exceeded that level in two decades. After peaking next year, borrowing costs should stay stable at least for some time before the central bank can start considering reversing the direction.

While higher borrowing costs will curb growth, the persistent lack of workers is putting the central bank in a comfortable position because it doesn’t need to worry about causing a rise in unemployment, according to Rusnok.

“The labor market is upside down,” he said. “We don’t have a shortage of jobs, we have a shortage of workers.”

The Czechs are primarily battling local price threats that began before the pandemic, but Rusnok also sees deeper changes in the world economy that are defying arguments that the global inflation surge is temporary.

He said that the “disinflationary era, that at times seemed to become the new normal in the developed world over the past 10 to 15 years, is over.”

The governor, whose term will expire at the end of June, expects the push to shorten supply chains and decarbonize economies will prevent a drop in production costs. In addition, years of unprecedented fiscal and monetary stimulus will keep driving consumption as well as the prices of real estate and other assets.

“We want to have clean energy, clean transport, and limit the use of plastics,” Rusnok said. “And all that will simply make many goods and services relatively more expensive for the coming years, if not decades.”