Governor Ales Michl told Bloomberg in London that a June rate hike in the Czech Republic has become a “live possibility.” He cited surging wages, stubborn service‑price growth and rising household credit as drivers of inflationary pressure. With the key rate sitting at 3.5%, a hike would be the first since he took office four years ago, challenging Prime Minister Andrej Babiš’s call for cheaper borrowing.

The governor warned that core inflation remains at an elevated 2.9%, reflecting domestic demand stress, while headline CPI eased to 2.1% in May. He said the bank must curb money‑supply growth fueled by a fiscal deficit and credit expansion. Market bets have risen, with forward‑rate agreements pricing in up to three quarter‑point hikes over the next year.

Michl stressed the Czech National Bank will decide “how tight” policy should be, not whether to tighten, emphasizing independence from political pressure. The ECB’s recent rate rise, its first since 2023, will be noted but not dictate the decision. Investors now watch the June 18 meeting for a concrete move that could reshape borrowing costs and mortgage rates in the region.