PRAGUE (Reuters) – Czech central bank governor Jiri Rusnok on Sunday defended the bank’s 75 basis point interest rate hike after the surprise move was criticized by Finance Minister Alena Schillerova ahead of the election legislative.
Schillerova said the hike transformed economic policy into a policy typical of developing countries. [L8N2QW5J1]
“These words are absolutely incompetent,” Rusnok said during a televised debate. “Terms are used that do not match.”
He said economic policy encompassed fiscal and structural policies as well as the area of central bank monetary policy, and that he was sure other central banks would follow suit by tightening their monetary policies.
Ahead of the October 8-9 elections, for which Schillerova tops the list of candidates for the ruling ANO party in the southeast region, he said the independent Czech central bank did not feel pressured from the government.
“We don’t feel any political pressure, these things are happening at more tense stages of development. In our situation, I don’t feel any such threat,” Rusnok said.
The bank’s move, which exceeds the 50 basis point tightening expected by financial markets, raised the main repo rate to 1.5%.
Rusnok said Thursday more hikes will follow, and repeated it on Sunday.
(Reporting by Jan Lopatka; editing by Catherine Evans)