The International Monetary Fund, as well as the bank's own
macro outlook and a minority on the board, have also said more
tightening would help tame price growth faster.
Kubicek, 46, a former central bank adviser who most recently
worked at the independent state budget watchdog, is one of two
new members who joined the seven-seat board in mid-February.
He said the policy debate was over whether the bank
should raise rates further and then cut them while the European
Central Bank might still be in tightening mode, or whether to
keep the current rates for longer.
"The second approach is closer to me personally," he said,
adding he did not share the view of some of his colleagues that
monetary policy needs to tighten to rein in inflationary
expectations.
** Click here for here for an interactive graphic:
Kubicek estimated inflation would drop to 6-8% by December. He also said some shock that would require raising rates could not be ruled out. "But as long as wages do not fundamentally accelerate, or the crown weakens to levels that we do not expect, then the current setting of rates should be enough," he said. Czech central bankers have fought criticism for their approach to inflation. High price growth, seen around central Europe, has hammered people's paychecks and pushed the Czech economy into recession at the end of last year. Kubicek said the crown, trading at almost 15-year highs in the past month, was a good supplementary tool for policy. The bank has pledged to prevent sharp swings in the crown exchange rate through currency market interventions since last May, but it has not had to sell foreign currency in recent months, according to its data.
Kubicek said an overheated labour market was a big question which could factor into wage demands. Another question mark was the government's fiscal policy.
"If debt were to grow at the current pace, we would be
forced to keep higher rates for longer," he said.
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Czech companies' inflation expectations high Czech companies' inflation expectations high ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Jason Hovet and Robert Muller; Editing by Andrew
Heavens, Jamie Freed and Christina Fincher)
