Transcript of the questions and answers from the press conference

You’ve mentioned several times now that the rise in services prices of around 5% is an inflationary risk, and so is the increase in property prices. What can you as the Czech National Bank do about it, when you’re still keeping the key interest rate at three and a half per cent? Can you actually do anything? And what would have to happen for the price growth to at least slow down?

In monetary policy, less is more. So it doesn’t make sense to just adjust the rate quickly. At present, we still assess the monetary policy stance as relatively tight. The money supply is growing slightly. We have positive real interest rates – that is, rates are higher than inflation – and we have a strong koruna. Taken together, these factors should help counter the effect of rising services prices and further price increases, and should ensure that inflation is at our target.

The koruna is at a seven-year high against the dollar, which is important for commodity prices. It’s also at nearly a two-year high against the euro, and several per cent stronger against the dollar than in the latest forecast. When or how would the exchange rate have to develop further for the inflationary factors identified by the Bank Board to be outweighed, potentially leading to further monetary policy easing in terms of interest rates?

We don’t have a specific threshold, but you’re right that the strong koruna is one of the reasons why we’re keeping all options open and why we still can’t rule out that the next step could be either a rate cut or a rate hike. We will respond appropriately to the situation – but we’ll do so reasonably, strategically and with a clear vision.