Prime Minister Fiala will meet with CNB Governor Michl and members of the bank board today

Prime Minister Fiala will meet with CNB Governor Michl and members of the bank board today

Premier Fiala met today with CNB Governor Michl and members of the banking board

Illustration photo – Governor of the Czech National Bank Aleš Michl.

Prague – Prime Minister Petr Fiala (ODS) will meet today with the governor of the Czech National Bank Aleš Michl and members of the bank board. The Minister of Finance Zbyněk Stanjura (STAN) will also take part in the meeting. Fiala and Michl clashed at the beginning of the month while searching for the causes of high inflation in the Czech Republic.

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“It will be a standard working meeting between the prime minister and the governor of the CNB, to which the minister of finance was also invited by the prime minister, as the topics of the meeting are mainly to be the joint fight against inflation and the parameters of the prepared consolidation package,” the Ministry of Finance said. The briefing after the meeting was not announced.

At the beginning of May, even before the publication of the consolidation package, Michl said that if the government's plan to restore public finances is not credible enough, the CNB will have to fight against the pro-inflationary impulse created by state budget deficits. The CNB is primarily responsible for inflation, its governor should not blame the government, Fiala responded and indicated that the central bank could do more against inflation.

Coalition leaders presented the form of the consolidation package two weeks ago. The government wants to save 62.4 billion crowns in state expenses next year with a set of tax changes and savings in subsidies, and to get 31.7 billion crowns from new revenues, i.e. to reduce the state budget deficit by 94.1 billion crowns. In the next year, it should be 53.4 billion crowns. According to the opposition coalition, instead of savings on the part of the state, taxes will burden certain groups of the population more.

At the last meeting on May 3, the Banking Council of the CNB kept the basic interest rate at seven percent. At the time, four council members voted to keep the rate unchanged, while the other three proposed increasing it to 7.25 percent. In an interview with Lidové noviny, member of the CNB banking board Jan Procházka recently spoke about the clear intention to keep interest rates at a higher level for a longer period of time than the main scenario of the central bank's forecast suggests, which assumes the first rate cut in the third quarter of this year. Higher interest rates have an anti-inflationary effect.