Speech given by Aleš Michl on his appointment as Governor

Aleš Michl, CNB Bank Board member
Appointment of CNB Governor
Prague, 11 May 2022

Dear Mr President,

Thank you for placing your confidence in me. It is my honour to work for our country, as my parents did for most of their lives.

I will be at the helm of the Bank Board from July. At that time, inflation in our country will probably still be at record highs, around 15%. The goal will be to gradually return inflation to 2%, which I assume will take two years.

The problem is that most of our current inflation is cost-driven and has been imported, mainly through expensive energy. As we have seen so far, this inflation cannot be curbed quickly by forcefully increasing interest rates.

Let’s assume that in July interest rates will be at a certain level and will have a preventive effect against demand inflation. I will recommend at the first Bank Board meeting in the summer in my new role as Governor that interest rates are kept stable for several months, and that we analyse the impacts of monetary policy up to now and evaluate the new data from the economy. And then together we will decide what to do next.

Reducing our country’s debt will be key to slowing inflation. Less debt means slower growth of the money supply in the economy and lower inflation in the future. In the words of Alois Rašín, of whom I am a proud admirer, it is important to work and save.

The Czech National Bank will remain a conservative institution which is to maintain price and financial stability for the people. These goals will not change in any way in the next six years.

Mr President, thank you once again.