PRAGUE, April 12 (Reuters) - The Czech National Bank has
not yet debated an interest rate cut and a further hike cannot
be ruled out with risks around wage developments and fiscal
policy remaining, board member Jan Kubicek was quoted as saying
on Wednesday.
Kubicek said in an interview with financial daily
Hospodarske Noviny that a drop in core inflation was still
needed before considering rate cuts, adding he did not see a
rapid interest rate decrease in the autumn as suggested by the
yield curve.
"In principle, we have not talked about cutting rates at all
yet," Kubicek, one of two new members on the seven-seat board,
told Hospodarske Noviny, according to an advance copy of an
interview due to be published in Thursday's paper.
"Of course I would have to be certain that there was a
decline in core inflation," he said when asked what would cause
him to consider it time for a rate cut.
The Czech central bank and other central European
policymakers started sharp rate hiking cycles in 2021 - before
bigger global peers - to get ahead of fast-rising inflation.
While they have paused those cycles since last year, the
region is also pushing back against market expectations of
looming interest rate cuts, especially with inflation still in
double digits and currencies holding strong for the most part.
Kubicek said wages and fiscal policy were still risks to
watch.
"Besides a more significant acceleration of wages, there
could also be a worrying fiscal development, because currently
government borrowing is the main source of money supply growth,"
he said.
He added state budget developments continuing to be "as bad
as in the first quarter would be, I think, an argument for
raising rates."
Kubicek, though, said inflation had likely peaked and could
be at a rate below 10% - from over 16% recorded in February - at
the end of the year.
The crown has been a key help to cutting into inflation,
with it rising to almost 15-year highs this year.
Kubicek told Hospodarske Noviny he did not believe the crown
was overvalued.
(Reporting by Robert Muller, writing by Jason Hovet, Editing by
William Maclean)
