Like other V4 countries, Czechia received a double blow in the aftermath of covid. The spike in many commodity prices had a larger effect on price levels due to the lower prices in the V4 region. That surge in inflation was compounded by the higher level of energy consumption in the heavily manufacturing economies. 

Zamrazilová argued that fiscal policy may have played a greater role than monetary policy in inflation. To illustrate her point, she compared the similar inflation rates in Slovakia and Czechia despite their very disparate monetary policies. If this is the case, she continued, government fiscal consolidation should put a greater dent in the price index than persisting with high borrowing rates. She noted that Czechia had one of the highest increases in public debt as a percentage of GDP between 2019-2022.  

Zamrazilová also noted that the high lending rates had shifted many companies to euro-denominated loans. In Q4 2022, 45.3% of the loans issued by domestic banks were issued in foreign currency The bank is monitoring how this may impact the competitiveness of the Czech SME sector, which may not have had access to those lower cost loans.  

She also said the bank will be following the residential mortgage market with interest AmCham is organizing a briefing for the vice-governor on this topic.  

Source: AmCham