Czech Vice Governor uses plain words to shut door to idea of negative rates

An influential member of the Czech National Bank's policy board made a clear statement in plain words: Don't expect me to agree to slashing interest rates below zero.

Reuters reports on remarks by Vice Governor Mojmir Hampl:

"For myself, I say that it is good to have this debate ... but if someone asked me now whether I would raise my hand for negative interest rates, then I would not do that ... It is a tool that you can not use indefinitely. It is a tool which has big cost and little return."

Hampl's straight talk comes amid a growing debate among central bankers globally about the pros and cons of negative rates, and about how deep below zero has actually shifted the lower bound.

Yet Hampl's stance is the complete antithesis of the communication approach advocated by former Federal Open Market Committee member Narayana Kocherlakota.

Hampl's "big cost and little return" is the equivalent of shutting the door completely to the idea of negative rates in my country.

His vocal opposition suggests that the Czech central bank (CNB) is unlikely to bring its key rate below zero, at least for the foreseeable future.

Hampl has in recent years emerged as a key player on the 7-member CNB policy board. Therefore I find it relatively difficult to see the CNB adopting negative interest rates in the face of Hampl's resistance.

I am not saying it is impossible but it is hard to imagine the outspoken and media savvy Vice Governor being sidelined in a vote on such a controversial measure.