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Czech central banker: Inflation will accelerate due to Ukraine crisis

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© Reuters. FILE PHOTO: Czech Crown coins and notes are seen in this picture illustration taken April 1, 2017. REUTERS/David W Cerny/Illustration

PRAGUE (Reuters) – Inflation in the Czech economy will accelerate, mainly due to the impact of the Ukraine crisis on energy prices, and it could go above 11%, Czech National Bank board member Tomas Holub said.

Therefore it is important to preserve the public’s belief that inflation will return to the central bank’s 2% target, Holub said in an interview published by the Hospodarske Noviny daily paper on Tuesday.

The Czech National Bank has lifted its benchmark rate by 425 basis points to a 20-year high of 4.50% since last June. That has included 375 basis points worth of hikes at the last four meetings.

This brought the central bank to a comfort situation, where the board could just fine tune rates and choose between 25 and 50 basis points for the possible next rate hike, Holub said.

The bank, the most aggressive among central European peers in tackling sharp price growth, has signalled a slowdown in its tightening even as inflation soared to 9.9% in January.

Czech central banker: inflation will accelerate due to Ukraine crisis

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