Fiala meets with head of central bank to discuss inflation

Prime Minister Petr Fiala met with the governor of the Czech National Bank, Aleš Michl, to discuss the inflation situation in the country on Thursday. Mr Fiala subsequently said that both agree on the need to continue the fight against rising costs and that it is necessary to substantially lower the current inflation levels.

The government announced a major budget restructuring earlier in May which is supposed to cut next year’s deficit by CZK 94.1 billion. Meanwhile, the country’s central bank raised interest rates, a common anti-inflationary measure, to 7 percent last year. A proposal to raise it further, to 7.25 percent, was voted down by its council earlier this month. Ahead of the government’s budgetary reforms announcement, Mr Michl said that the bank would have to combat the inflationary impulse caused by the state’s rising deficit.

Inflation breached double digit numbers last February and climbed as high as 18 percent in September. However, it has been falling January, with the year-on-year inflation rate in April lying at 12.7 percent, down by more than 2 percent when compared to the previous month.