The Czech National Bank published a speech by Deputy Governor Jan Frait for the Citi Global EM Macro and Credit Conference in London that restated the bank's spring 2026 outlook and argued for maintaining long-term macroeconomic and macrofinancial stability. The speech said headline inflation is expected to stay in the upper half of the tolerance band in the coming quarters, reach 3 percent at the turn of the year and then return towards target during 2027, while core inflation is expected to remain around 3 percent in 2026. It also noted that the Bank Board sees the risks and uncertainties around meeting the inflation target as inflationary overall. Those risks were linked to a still tight labour market, elevated wage growth, persistent services inflation, rising residential property prices and accelerating bank credit, which the presentation said was increasing money growth in the economy. The spring 2026 forecast shown in the slides projected 2.2 percent inflation and 2.5 percent GDP growth in 2026, with 3M PRIBOR at 3.8 percent and the average CZK/EUR exchange rate at 24.3. Frait also warned that faster public and private debt accumulation can shift between sectors and across borders, that low or zero risk capital charges can encourage leverage in areas such as mortgages and government debt, and that rapid public debt growth can resemble a credit boom with weaker long-run benefits.
Czech National Bank2026-06-02
Czech National Bank Deputy Governor restates spring 2026 inflation outlook and warns on debt and property market risks
The Czech National Bank published a speech by Deputy Governor Jan Frait restating its spring 2026 outlook and emphasising the need to maintain long-term macroeconomic and macrofinancial stability. The Bank expects headline inflation to remain in the upper half of the tolerance band in the near term, reach 3 percent around year-end and move towards target in 2027, with core inflation around 3 percent in 2026. It projects 2.2 percent inflation, 2.5 percent GDP growth, 3M PRIBOR at 3.8 percent and an average CZK/EUR rate of 24.3 in 2026. The Bank Board sees inflationary risks from a tight labour market, elevated wages, persistent services inflation, rising residential property prices and accelerating bank credit, and Frait warned that rapid public and private debt accumulation and low risk weights can encourage leverage and credit boom-like dynamics.