The Czech National Bank governor, Josef Tosovsky, yesterday submitted his resignation to President Havel, effective the end of November. His departure has been expected by the markets (until recently Tosovsky was a candidate for a top EBRD job), but its timing was likely determined by new central bank legislation, which effectively limits the CNB’s autonomy and makes it more dependent on the political process. (President Havel has vetoed the law, but Parliament will find it easy to overrule his veto.) Tosovky’s departure will allow Havel to appoint a successor prior to the likelihood of the new CNB law taking effect next year.
We do not expect Tosovsky’s departure to have any major impact on Czech monetary policy, considering the top candidates for the job (two CNB vice governors). We continue to expect a mild tightening of monetary policy in the course of 2001 as a result of the rebound in CPI inflation that we forecast for the second half of next year. Czech financial markets did not show any noticeable response to the announcement yesterday.