The new Czech central bank governor says it will take two years for inflation to return to normal.

The new nomination for Jiří Rusnok’s successor believes that inflation is likely to reach around 15 percent. He expects the process of returning inflation to the standard 2 percent level to take two years.

Michl said the problem of high prices was primarily the result of external factors, noting especially high energy prices. He plans to propose that CNB stabilize interest rates at the bank’s first board of directors this summer under his leadership. Banks also assess the impact of current monetary policy and other economic indicators before deciding how to proceed.

The Czech National Bank has already raised interest rates since last year. The recent increase in the May two-week repo rate from 0.75 percentage points to 5.75 percent was the highest since 1999.

President Miloš Zeman had four candidates who were secretly talking about his decision until the day of the official naming ceremony. But he said he had already decided who the next leader of the central bank would be some time ago.

The statement that high inflation is mainly caused by the effects of the war in Ukraine is inaccurate, as inflation in the Czech Republic had already reached double-digit numbers before the Kremlin began its invasion, the president said. rice field. According to the Czech head of state, there are two groups of economists on the inflation debate. One group believes that the current inflation problem is primarily caused by demand problems, and argues that raising interest rates is an ideal way to solve the problem. Other groups, meanwhile, look at the causes of spending problems and argue that raising interest rates can actually help boost inflation. The president said he needed to hear from both groups. He also announced that bankers were critical of the rate hike policy and decided to choose Ares Michel as president.

Michl holds a PhD from the University of Economics in Prague. He worked as a private sector analyst and investment strategist, as well as an advisor to several governments in the country. Since 2018 he has been a member of the Advisory Board of the Czech National Bank.

He faced controversy in the past due to his position on the advisory board while owning shares in the Quant Investment Fund. In 2019, Michl chose to create a private trust fund to place Quant assets. According to the news site Aktuálně.cz, Michl refused to publish a document providing details on how to manage the trust fund. The new Czech central bank governor says it will take two years for inflation to return to normal.

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