Czech central bank chief defends interest rate hike criticized by finmin


Czech Finance Minister Alena Schillerova will take part in an interview with Reuters on October 11, 2019 in Prague. REUTERS / Robert Muller

PRAGUE, October 3 (Reuters) – Czech central bank governor Jiri Rusnok defended the bank’s 75 basis point rate hike on Sunday after Finance Minister Alena Schillerova criticized the surprise move ahead of a parliamentary election.

Schillerova said the increase has steered economic policy in a direction typical of developing countries. L8N2QW5J1

“Those words are absolutely incompetent,” said Rusnok during a televised debate. “Terms are used that do not fit.”

He said economic policy encompassed fiscal, structural and central bank monetary policy, and he was certain that other central banks would follow suit by tightening their monetary policies.

Ahead of the October 8–9 elections, in which Schillerova heads the candidate list for the ruling ANO party in the southeast, he said the independent Czech central bank did not feel pressured by the government.

“We do not feel any political pressure, these things happen in tense phases of development. In our situation I do not feel such a threat,” said Rusnok.

The bank’s move, exceeding the tightening anticipated by the financial markets by 50 basis points, pushed the main repo rate to 1.5%.

Rusnok said on Thursday that more hikes would follow and repeated it on Sunday.

Reporting by Jan Lopatka; Editing by Catherine Evans

Our standards: The Thomson Reuters Trust Principles.

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