Aleš Michl: Taming inflation from 18 to 2% and paving the way for ESG financing

Speech by Mr Aleš Michl, Governor of the Czech National Bank, at the Central Banking Summer Meetings, London, 13 June 2024.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Good morning. I would like to thank the organisers for the invitation. I would like to thank Jade for her excellent coordination with my team. It is an honour to speak here today.

I became Governor of the Czech National Bank in July 2022.

Inflation was at 17.5 per cent and peaked two months later at 18 per cent.

This was the highest inflation rate in the history of the Czech Republic (except for price liberalisation after the Velvet Revolution in the early 1990s).

This year, in February and March, annual inflation reached 2 per cent, which is exactly our target.

And today, I am here to tell you how we got from 18 to 2%.

This chart shows data from the Czech Republic.

The chart starts in 2010 and ends at the point when I became Governor.

The x-axis indicates time and the y-axis shows the percentages.

• The blue line is CPI inflation.
• The red line is the key interest rate of the CNB.
• The yellow line is the real ex-ante interest rate (that is, the CNB's policy rate adjusted for the value that analysts expect the inflation rate to be in 12 months' time).
• The black horizontal line shows the CNB's inflation target, which is 2% in terms of CPI inflation.