© Reuters. FILE PHOTO: The Czech National Bank is seen in Prague, Czech Republic, April 26, 2023. REUTERS/David W Cerny/File Photo
(Reuters) – Czech policymakers could consider accelerating the pace of interest rate cuts as inflation ebbs to “relatively standard” levels, Czech National Bank (CNB) board member Tomas Holub said in an interview with Bloomberg News on Monday.
Holub said the options for the central bank’s Feb. 8 meeting included cutting the benchmark rate by 25 or 50 basis points after policymakers began easing last month with a quarter-percentage-point cut to 6.75%, the first reduction in over three years.
That reduction joined policy easing already underway in Hungary and Poland, as inflation retreats following a surge in previous years.
“The battle to restore price stability and reach our inflation target hasn’t been definitively won, but we’re approaching levels that can be considered relatively standard,” Holub told Bloomberg News.
“Even if central bankers opt for a bigger cut to the benchmark to 6.25% on Feb. 8, monetary conditions would remain restrictive.”
Policymakers have been waiting to see January data – due for release in mid-February – to assess the impact of companies re-pricing goods and services at the start of the year.
Though preliminary indicators suggest there will be “no drama” in inflation data for the first month of the year, Holub said that the focus would soon shift from 2024 to 2025, when he expects core inflation, a measure of underlying domestic demand pressures, to be “fully tamed.”