Czech central bank chief: rates likely to rise in June if forecast confirmed

div classBodysc17zpet90 cdBBJodivpPRAGUE Reuters – The Czech central bank will likely raise interest rate further in June if data from the economy are in line with the banks latest macroeconomic forecast, Governor Jiri Rusnok said on Sunday.p

p“If the current forecast is being confirmed, the probability is high,” he said in a Czech Television debate.pdivdivdiv classBodysc17zpet90 cdBBJodiv

pRusnok, who will leave his post a week after the June 22 policy meeting, said it was possible the main rate, now at 5.75, would go over the 6 mark in June but did not say how likely that was.p

pRusnok will be succeeded in July by board member Ales Michl, who has opposed all 550 basis points worth of rate hikes the bank has delivered over the past year, and has said he expected to propose rate stability for some time after he takes over.p

pHis selection prompted a selloff of the crown currency, leading the central bank to intervene in the foreign exchange market earlier this month to avoid currency weakness from raising inflation further through import prices.p

pThe banks latest quarterly forecast issued in May saw official interest rates peaking around 8 this quarter, but the policymaking board took a path somewhat closer to an alternative scenario modelling a slower inflation drop amid a lower rate path.p

pThe bank expects inflation to peak at 15 in June, far from its 2 target. The majority of the banks board has seen a demand component of inflation, largely from tight domestic labour market, which required response from monetary policy.p

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pp Reporting by Jan Lopatkap

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