switzerland. a strong central bank is now a firm anchor in the economy. over the next six years, monetary policy should be more restrictive, or rather interest rates should be higher, than in the, say, six to ten years before covid. we need to motivate people, firms and also the government to save. it's the only road towards less debt. this is the first policy for a strong koruna. second policy for a strong koruna – fiscal policy inflation was last at the cnb's target in 2018, a period when public finances were in a surplus. in 2017, the public finance surplus in the czech republic was 1. 5 % of gdp. in 2018 it was 0. 9 % of gdp and in 2019 it was 0. 3 % of gdp. that is no accident. 2 / 4 bis - central bankers'speeches defeating inflation is conditional on monetary and fiscal policy coordination. 6 the key question is : will the higher inflation observed after covid be persistent? the answer depends not only on monetary policy, but also on the government's credibility regarding its willingness to stabilise debt. if fiscal policy generates rising deficits, monetary policy alone cannot ensure permanently low inflation. if the central bank increases rates, it will cause a recession. in an entitlement economy, the government will attempt to compensate people for the recession with accommodative fiscal policy. this in turn will fuel inflation. that's why i have said after each monetary policy meeting at which we have left interest rates unchanged that reducing the country's debt is another key condition for lowering inflation. orderly finances are the road towards a good rating, towards credibility of the country as a whole and towards a strong koruna. third policy for a strong koruna – long - term growth policy monetary and fiscal policies endeavour to dampen fluctuations in the business cycle. in the last three years, they have been focused mainly on finding short - term solutions to the covid and energy crises. however, we must not forget the third variable in the equation, which i would call long - term growth policy. the long - term growth of an economy depends on its production capacity, or on supply, that is, on people and their hard work and on the capital and technology in the economy. i want people to save so that capital is accumulated for investment. i want wage growth to be in line with growth in labour productivity. 7 this will increase supply, the country '

s potential, and the economy will grow in a non - inflationary way. above all, if there is less debt, the quantity of money in the economy won't grow too much. this is an important condition for reducing inflation. ultimately, such an economy should attract foreign direct investment and its exports should thrive. the result will be a strong koruna. 1 zeman, m. ( 2016 ). speech at the festival exportu 2016 conference, czechinno, prague. 2 see https : / / www. cnb. cz / cs / verejnost / servis - pro - media / autorske - clanky - rozhovory - s - predstaviteli - cnb / covid - a - socialismus - nebezpecny - saci - reflex - naroda / and https : / / www. cnb. cz / cs / verejnost / servis - pro - media / autorske - clanky - rozhovory - s - predstaviteli - cnb / klausova - draha - permanentka / 3 https : / / www. cnb. cz / cs / o _ cnb / cnblog / inflace - v - cr - cyklicky - ci - acyklicky - pribeh / 4 https : / / www. cnb. cz / cs / verejnost / servis - pro - media / autorske - clanky - rozhovory - s - predstaviteli - cnb / krotitele - nakladove - inflace / 5 for details, see https : / / www. cnb. cz / cs / o _ cnb / cnblog / jak - dlouhy - je - spravny - horizont - menove - politiky /. 3 / 4 bis - central bankers'speeches 6 https : / / www. cnb. cz / cs / verejnost / servis - pro - media / autorske - clanky - rozhovory - s - predstaviteli - cnb / zapisky - z - jackson - hole - 1 - 00001. - dil / 7 https : / / www. cnb. cz / cs / verejnost / servis - pro - media /