In an interview for the Insider podcast, Aleš Michl described how the central bank thinks today. It was not one sentence taken out of context — the CNB describes it as the longest interview he has ever given, and he returned to the subject several times. Here is what it means for someone dealing with a mortgage.
A change of philosophy, not a temporary measure
Michl described how, for more than fifteen years, interest rates in this country sat below inflation. Money kept in a bank was losing real value, which encouraged borrowing. By his own account, he has turned that around during his time in office: rates should be above inflation, so that saving pays off rather than borrowing.
And that is the heart of it — he did not talk about it as a temporary reaction to the inflation wave of 2022 and 2023, but as a change in the central bank’s approach. He put it like this:
We have completely changed our philosophy, we want to have rates higher than they used to be, and we want to keep inflation in check this way over the long term.
How this feeds through to mortgages
CNB rates matter for mortgages, but the price of a mortgage is not set by the base rate alone. When banks set mortgage rates, they take into account long-term market rates, their own funding costs, risk and commercial terms. And long-term market rates reflect, among other things, the expected path of interest rates across the whole relevant period, not just where they are supposed to end up.
So you cannot calculate a mortgage rate from the inflation target itself. The governor is signalling that he does not expect low rates to return during his time in office. That is why I would not base a mortgage decision solely on the hope that rates will soon come down.
“We will not back down” — and be ready for slower growth
The governor went further than central bankers usually do. He said rates have to be higher and stay that way for longer, and that the central bank will not back down — even at the price of the economy growing more slowly. In his view that price is worth paying, because low inflation comes first.
He titled the lecture he gave on the subject at MIT “Forever a hawk”. He does not expect a return to a period of low rates during his time in office — and his mandate still has some time to run.
And what matters even more: he is not afraid to raise them
Most people read news about rates as a question of “when will they fall”. But Michl said explicitly that he will not be afraid to raise them — if core inflation excluding energy threatens to rise, or if its momentum picks up, which the central bank tracks as three-month moving averages of month-on-month changes. In June 2026 the CNB Bank Board did exactly that — it raised rates for the first time in four years.
So the scenario a lot of people are quietly counting on — “I’ll wait a year and rates will come down” — finds no support in what the governor is saying.
What to do about it as a client
Nobody knows where the bottom is. I didn’t call it either. I can’t promise you a rate — but I can help you get certainty about your payment for the fixed-rate period.
I won’t promise you future rates — I can’t read a crystal ball. What I can give you is the options, the historical record, and the ways people have worked with their rate. On that basis you can make the decision that makes the most sense for you at the time — and you will know why you made it.
The practical consequence lies elsewhere: handling the fixed-rate period badly can cost you hundreds of thousands. If you fixed a low rate in 2020 or 2021 for only five years, you can work out for yourself what it cost you not to fix for ten years — I have worked it out on a real contract in a separate article. You cannot hit the bottom, but with the right advice you can tell how rates are moving in the period you are in. Rates can be dealt with as much as three years before the fixed-rate period ends — not once the letter from the bank arrives.
Sorting out a mortgage and not sure whether to act now or wait?
Write to me and I will get back to you. We will go through your particular situation — what you would pay now, what waiting would mean, and whether it is worth going ahead at all. If waiting is the better option, I will tell you that straight as well.
Leave your details +420 725 032 139Source: Aleš Michl, Governor of the Czech National Bank, interview for the Insider podcast, 18 May 2026. The quotation comes from the official transcript published by the CNB (in Czech, translated here). The June rate increase refers to the CNB Bank Board decision of 18 June 2026 (two-week repo rate 3.75%, effective 19 June 2026); the previous increase was in June 2022. This text is not a forecast of how rates will develop.
Marketing communication. This text is for information only; it is not an offer or a personal recommendation and it contains no forecast of future developments. The actual terms always depend on the assessment of the particular bank. Jan Roztočil, Czech business identification number (IČO) 76037061 · tied agent representing a single company, Broker Trust, a.s. · supervised by the Czech National Bank.