Czech central-bank head urges less spending to avoid rate hikes

Bloomberg

Czech central-bank Governor Ales Michl is intensifying his appeal on people and the government to help tame inflation by spending less so that policymakers can refrain from raising interest rates further.
Inflation will slow considerably from spring and move towards the 2% target next year, with the central bank’s baseline scenario foreseeing stable borrowing costs and a strong currency, Michl said in a debate on CNN Prima News channel. He reiterated his recent warnings that the bank may tighten monetary policy further if it sees a major jump in domestic price pressures.
The Czech National Bank has held rates steady since Michl took office in July after he opposed rapid hikes enacted by the previous leadership.
He has said rates will stay higher during his six-year term than in the past decade to encourage savings and has been calling for moderate wage demands.
“The most important thing for us now is that households really start saving, stop spending,” Michl said. “It’s so far happening, household spending is smaller and smaller. That’s the first good news, because it’s an anti-inflationary phenomenon.”
He urged the government to be cautious about boosting spending on subsidies and welfare aid because that would run counter to restrictive monetary policy.