(Bloomberg) -- Czech policy maker Ales Michl, who will take over as the central bank governor in July, was one of the two board members who argued for keeping interest rates stable at the May 5 monetary meeting, according to minutes from the discussion published Friday.

The two were outvoted by the majority of the board, which backed a 75 basis-point increase to 5.75%. 

Michl and Oldrich Dedek reiterated their view that the war in Ukraine was a structural break that was making the policy of sharp rate hikes even more problematic. The cost-driven inflation is now exacerbated by the war and would continue to make it impossible to rein in price growth with interest rates, they said.

“In their opinion, it would be more appropriate to leave interest rates unchanged for a few months and continue to assess the situation,” the bank said in the minutes.

By contrast, the majority of the board said that it was necessary to tighten monetary policy further, all the more so now given the upward trend in interest rates around the world. 

Outgoing Governor Jiri Rusnok considered the idea that there was no need to raise rates in the present situation as an “abdication of the central bank’s price stability mandate,” according to the minutes.

Rusnok, Deputy Governor Marek Mora, and board members Vojtech Benda and Tomas Holub said it was possible to consider raising interest rates even by a full percentage point.

Read more:

Koruna Turmoil Shows Dilemma for New Czech Central Bank Boss

Worst Inflation in Three Decades Boosts Czech Rate Hike Case 

Czechs Raise Rates to Highest Since 1999 as Price Risks Escalate


©2022 Bloomberg L.P.