PRAGUE, May 29 (Reuters) – Czech central banker Tomas Holub said on Sunday he was likely to support another interest rate hike in June of around 75 basis points.
The increase would take the key two-week repo rate to 6.5% after the bank raised rates by 550 basis points over the past year as part of the fight against inflation, which has reached 14.2% in April.
The next monetary policy meeting is scheduled for June 22.
“I assume that in June I will support another interest rate hike, roughly the size expected by the financial market (about 75 basis points),” Holub said during a live debate on Czech television.
Holub previously said he would likely vote for another hike in June, but he didn’t specify the size.
“It’s a realistic market forecast, taking into account that the market knows our macroeconomic forecast, where our outlook would see the level of interest rates that would bring inflation back to low numbers with sufficient speed,” he said. he declared.
The bank’s latest quarterly forecast, released in May, forecast rates peaking at around 8% this quarter. But at its meeting on May 5, the board of directors moved closer to an alternative scenario modeling a slower decline in inflation and a lower rate trajectory.
Since the May meeting, where the bank signaled that further hikes could take place, Governor Jiri Rusnok and Deputy Governor Tomas Nidetzky have said a rate hike was likely in June, while the board member administrator, Vojtech Benda, mentioned stable rates as a possibility.
Only two members of the seven-seat board, Oldrich Dedek and Ales Michl, have consistently voted for stable rates over the past year. Michl is due to take over as governor of the board in July.
Chairman Milos Zeman has yet to decide on three board appointments, which could tip the majority opinion on the board toward Michl. (Reporting by Robert Muller, editing by Michael Kahn and Hugh Lawson)