PRAGUE -The Czech National Bank is likely to moderately raise interest rates further as the return of inflation towards the central bank’s 2% target will be delayed, Governor Jiri Rusnok said on Tuesday.
On March 31, the central bank lifted its benchmark rate by 50 basis points to 5.00%, its highest since 2001, and said it was ready to tighten policy further to keep inflation expectations anchored.
“It is likely that there will be some further moderate increase (of rates), but I don’t think it should be something fierce, it will be one of the last (hikes) necessary, I firmly hope, in this cycle of rate increases,” Rusnok said in an interview streamed at www.dvtv.cz news portal.
The central bank board will wait for new data and a fresh update to the staff macroeconomic forecast which will be available ahead of the next policy meeting due on May 5, Rusnok said.
“We are living in a period of enormous uncertainty, the data changes overnight,” Rusnok said.
Inflation soared to a 24-year high of 12.7% in March. Rusnok said the war in Ukraine had a strong impact, and that price growth would slow towards the central bank’s 2% target only later in 2023.
The current outlook sees average inflation at 3.0% in the first quarter of 2023.