Interview with Jakub Seidler, Bank Board Member
By Jason Hovet (Reuters 27. 10. 2026)
Resilient demand in the Czech economy and elevated energy prices speak in favour of a further interest rate hike when the central bank meets next month, policymaker Jakub Seidler said.
But a potential hike on November 5 would not start a tightening cycle, he said, saying a meeting-by-meeting approach was needed given uncertainty in the global economy.
The Czech National Bank already raised its main interest rate by 25 basis points to 3.75% in June, as so far the only central bank in central Europe to tighten policy in response to price pressures caused by the Middle East conflict.
"Taking into account the latest developments, mainly resilient domestic demand and energy prices remaining elevated for longer, I am inclined to back a standard 25-basis-point hike in November," Seidler, a member of the bank's seven-seat board, said in a reply to emailed questions.
He added he had not yet seen staff analysis and recommendations before the meeting.
"Even a potential hike in November I would not see as the beginning of a cycle," he said.
Forward rates price in four hikes in the next 12 months, which Seidler called "exaggerated" given that surveys of economists pointed to much less tightening.
He said market players, however, had limited appetite for bets on a more moderate rate path when global factors, such as another escalation in the Middle East, could quickly shift market expectations, triggering stop-losses on such positions.
VISIBLE INFLATIONARY EFFECTS
The tightening of financial conditions caused by rising long-term yields has helped buy some time for a policy reaction, partly through the feed-through to mortgage rates, Seidler also said.
He said the inflationary developments linked to the Iran war and its impact on the energy crisis were clearly visible in the Czech economy.
Last month, producer price growth accelerated to 3.7% year-on-year, and Seidler attributed much of the change to prices of coke and refined products, along with electricity and gas. Agricultural producer prices are also expected to increase on a year-on-year basis.
Services prices also continue to be too high, he said.
INFLATION PEAK COMING
Seidler said headline inflation, which hit 2.5% in September, could temporarily peak in the first quarter of 2027 at an average of around 3.5% – outside the central bank's 1% to 3% tolerance range around its 2% target.
In energy markets, crude and natural gas prices are above levels forecast in CNB's latest economic outlook from August, he said.
This combined with domestic demand and nominal wage growth exceeding 6% was a clear indication the bank was likely to revise up its 2027 inflation forecast, he said.
He said he expected the bank's new macroeconomic outlook - due next month – to also show weaker growth, especially this year, but an acceleration next year can still be expected.
"We are facing a traditional stagflationary shock," he said. "The resilience of domestic demand given external developments is a positive factor; on the other hand, it increases the risk of stronger second-round effects on inflation."