Transcript of the questions and answers from the press conference

The sentence in your statement saying that the Bank Board sees the risks to achieving the inflation target as inflationary is the same as after the previous meeting. However, apart from the exchange rate, the new forecast and all the risks you mention in the presentation are tilted more to the upside. Faster growth – you mention the ETS for the first time – and still other risks that were mentioned earlier. Overall, it gives the impression that if further rate cuts were uncertain after the previous meeting, then after today’s meeting it looks like none are on the horizon. Could you comment on that outlook or how it relates to my understanding of the situation?

At the moment, we are not going to make any firm statement about the future path of interest rates. We are keeping all options open. But you are right in saying that the current state of the economy does not allow for further interest rate cuts, although that is still under the current conditions, at the present time.

I will follow up on my colleague’s question and press you a bit more on the same issue. You have basically repeated the phrase that inflationary pressures in the Czech economy currently preclude further rate cuts. That suggests to me that today’s debate was, and perhaps in the near future will be, a choice between a possible cut and stability. Is that the right way to understand it, or something else? And I have a follow-up question. The forecast implies a slight rate cut now in the second half of the year and then a slight increase next year. So if the economy developed exactly in line with your forecast, would the Bank Board prefer to mirror the forecast or to smooth rates out?

Our statement after the meeting and my press conference today should definitely sound hawkish. That’s how we want to sound, and that’s how we are sounding. But it still holds that we are keeping all options open. All three possibilities remain on the table. We will assess what is best for the economy. As for the forecast, the Monetary Department has shifted the trajectory of future interest rates somewhat higher. They will explain this in detail tomorrow at the regular meeting with analysts, which will also be streamed on the website. The main reasons are the incorporation of certain risks – or their materialisation – into the forecast, the government’s deficit spending, growth in the money supply, as well as a reassessment of the interest rate path in the euro area, and also model adjustments, which the department’s executive director will explain in detail tomorrow.

And just on smoothing – if the current forecast were to materialise fully, would the Bank Board generally prefer to smooth rates out, or to go down and then back up?

I do not smooth; I fight inflation. So we will make decisions in a way that ensures we fight inflation.