The economy should not be exposed to high interest rates for too long
Deputy Governor Tomáš Nidetzký in an interview for Bloomberg – CNB interest rates will exceed 4% in February, peaking at around 5% this spring. They should only remain at these levels for as long as necessary for inflation to start showing an effective response to the high interest rates, which will then start going down.
We want to hike as fast as possible to avoid being behind the curve, but we don’t want to expose the economy to high interest rates for too long. We would like the forecast to materialise, and then we would like to be able to start lowering rates so that the economy is only exposed to high interest rates for a short time.
If inflation doesn’t start coming down to the CNB’s 2% target as quickly as the central bank wants, Deputy Governor Nidetzký would be reluctant to deliver any more steep hikes and would instead prefer to keep the economy exposed to higher rates for longer to secure price stability.