Transcript of the questions and answers from the press conference

You announced that the preparation of a strategy for a future easing of monetary policy would be the main topic of the meeting today. Could you please summarise the debate and what you arrived at? More specifically, if I may, based on the current situation, as well as the opinion of your colleagues and your personal opinion, how likely or unlikely do you consider it that interest rates will start decreasing already this year, or even at the next meeting in November?

I will state no probability here. Yes, we discussed a plan for lowering interest rates, not the possibility of lowering interest rates. So, we’ll be ready. We have a clear strategy. The key is that at each Bank Board meeting we will assess the new data. We will have a new forecast, or an update of the latest forecast, and we will assess whether the risks to the forecast are materialising, whether the risks as seen by the Bank Board members are inflationary or anti-inflationary. And at each meeting, each Bank Board member will decide and I will then present the outcome here.

That’s all. I can’t give any other information regarding the future. All options are open. However, it also holds true that lowering interest rates wasn’t on the table today.

Looking one step further ahead, you have declared that the interest rate path is likely to be above the baseline scenario in the coming quarters. However, the baseline scenario expects the inflation target to be reached in Q2 even with a relatively aggressive interest rate decrease. That means that if all other assumptions of the baseline scenario materialise, the inflation target would be undershot in the case of a higher interest rate path. I therefore want to ask whether you personally have any problem with that, or, if this were on the cards, how the central bank would react.

I think it’s appropriate really just to state my personal opinion now. From my point of view, the core inflation outlook for next year is still over 3%. So, yes, if headline inflation is below 2% and within our tolerance band of ±1 pp, I don’t mind a slight undershooting of the target. The key thing is to prevent persistent inflation, reduce core inflation next year and deliver a period of low inflation in the Czech Republic.