The head of Czech National Bank sees economic signals that point in both directions, towards continued growth and a slowdown, he was quoted as saying on Monday.
The central bank raised its main two-week repo rate to 1.75 percent in five steps last year, then paused in December and February Governor. Some analysts see chances of a rate increase at the next policy meeting, on March 28, or the following meeting.
“On one hand, there are signals of a slowdown, almost to the point of recession, but there are also contradicting ones, which suggest that nothing dramatic is going on and both the Czech and European economies will continue growing,” Governor Jiri Rusnok said in an interview published by Euro magazine.
Rusnok also said that he expected Czech wage growth to slow. The central bank has been monitoring the rapid growth here as one of the key factors determining inflationary pressures.
“It is a macroeconomic challenge, of course, but it still is not anything fatal. The economy has inner reserves and it is able to sustain this development this year. I believe that the slowdown will manifest itself next year,” he said.
Headline inflation reached its highest since October 2017 in February, an annual 2.7 percent, above the central bank’s own estimates and influenced by energy price increases.
However, the average Czech real monthly wage rose by 4.7 percent year-on-year in the fourth quarter, slower than the central bank has expected, data showed on Friday.
Rusnok also spoke about mortgage-lending measures that the central bank introduced in October in an attempt to cool the market, seen as potential risk for the financial system in case of an unrestrained build-up of debt.
“We will evaluate our measures in autumn and I don’t see us tightening them. We will rather be able to ease some of them,” Rusnok said.