The Czech National Bank has rejected Prime Minister Andrej Babis’s suggestion that it should share its profit with the state and lower interest rates further. CNB stressed that it is independent of the government.
The central bank said it was unclear what profit Babis meant. They pointed out that the CNB Bank Board decided to use last year’s profit of CZK 57.9 billion to cover losses from previous years.
The independence of the press, the courts, and the central bank is a hallmark of democracy, the CNB said. “The Czech National Bank, the Bank Board and any member of the Bank Board, are not allowed by law to receive or request instructions from the President, government, parliament, administrative authorities, or any other entity,” the CNB said. In addition to openness and expertise, independence is one of the three underlying principles of the CNB’s functioning.
In March, the CNB cut interest rates twice to mitigate the impact of the coronavirus epidemic on Czech companies, entrepreneurs, and households. The Bank Board will decide on any further measures to stabilize the economy, including further rate cuts, at its discretion, the CNB said. Such steps will be taken when it deems it appropriate to fulfill its mandate of ensuring price and financial stability, it added.