PRAGUE (Reuters) – The drop in Czech inflation reflects a return to price stability although there are still risks that mean policy easing should be gradual and cautious, central bank board member Tomas Holub said in an interview with Czech media.
“From this view, monetary policy does not have to be as strict as when there was double-digit inflation, but its easing must be gradual and relatively cautious,” Holub said in an interview with the Roklen24 news website published on Tuesday.
Inflation fell back to near the central bank’s 2% target in January, reaching a rate of 2.3% year-on-year, after hitting double-digit peaks in 2022 and 2023.
Holub said that the January figure was closer to target than the bank expected, but caution was warranted as some price segments, such as services, were not back to normal.
There was also the risk that some segments that had helped lower inflation could turn, along with concerns over global shipping disruptions or a weakening crown currency, Holub said in the interview.
These risks were likely not a threat to price stability, he said, but could keep inflation more in the upper half of the bank’s 1-3% tolerance band.
(Reporting by Jason Hovet; Editing by Ros Russell)
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