The close vote surprised markets which have been expecting stability before rate cuts later this year.
Governor Ales Michl had said on Wednesday that fiscal policy, as the government runs high budget deficits, was a concern and could lead to a rate hike, calling on the government to put together a "credible" consolidation plan. Government parties hope to agree a package of budget-saving measures for 2024 this month, and Prime Minister Petr Fiala hit back at Michl's criticism on Wednesday evening. The bank's new forecast sees a fiscal deficit of 3.9% of gross domestic product in 2023 and a drop to 2.5% in 2024, which does not include the planned budget cuts. Both forecasts see lower deficits than the bank had forecast in its previous outlook, and Kubelkova faced analysts' questions on the reason fiscal policy was highlighted as a reason for higher rates.
"Fiscal policy was just one of the arguments," she said.
"We discussed also inflation expectations and wages."
The bank will release minutes of the last meeting
showing who supported a rate hike on May 12.
A clear majority on the board had previously backed stable
policy following a 675 basis point hiking cycle between June
2021 and June 2022.
Many analysts expect the bank will hold interest rates higher for longer as it seeks to bring inflation, standing at 15.0% in March, back to its 2% target next year. (Reporting by Jan Lopatka, writing by Jason Hovet, editing by Christina Fincher)
