Transcript of the questions and answers from the press conference

In the statement, the assessment of risks has changed from inflationary overall to balanced, but the summary and list of those risks basically remains the same. Could you tell us where the weights of those risks have shifted? Have the upside risks weakened or the downside risks strengthened? What is the main factor behind this change in assessment?

A major anti-inflationary risk has emerged – a global decline or collapse in asset prices. In addition, we considered that if the government delivers on its plan to waive the fee for renewable energy sources for firms and households, inflation would fall by about 0.3 percentage point next year as a one-off effect. This is a preliminary estimate by the Monetary Department. As a result, the inflation outlook for next year would decline slightly, falling below the inflation target, although the effect would fade out the following year. Even then, inflation would be roughly at the target the following year. Therefore, the Bank Board has changed its assessment of the risk of deviation from the target from inflationary to balanced. Those were the two main reasons.

And that leads to the second question. If this change in energy prices reduces headline inflation, how will you assess it from a monetary policy perspective? Will there be any monetary policy response to such an impact?

The Bank Board agreed today that we will not respond to this government measure, because it will have only a one-off effect on inflation next year. Inflation will be lower, but in 2027 – which we need to focus on – the effect will disappear. So we have to be forward-looking, and we don’t mind if inflation next year is 1.7%, 1.8% or 1.9%. That’s still better than 2.1%, 2.2% or 2.3%, because the Czech Republic deserves low inflation. Our main focus is already very much on 2027, to ensure inflation remains low.