are raised, monetary policymaking expenses increase. we pay interest to commercial banks for their excess liquidity deposits. to give you an idea, the cnb paid czk 14. 7 billion to the banks in interest on deposited liquidity in april 2023, which may amount to czk 180 billion for 2023 as a whole. this can lead to a change in the behaviour of banks, i. e. how and to whom they provide loans, by how much they raise deposit rates. in a system with excess liquidity, banks easily buy government bonds and government debt is monetised. an important lesson for me is that we will try not to repeat 2017 at the cnb and conduct monetary policy in a conventional manner. in his article, " less is more " for the imf's magazine, professor at the university of chicago and former governor of the reserve bank of india raghuram rajan said : " central banks have constrained their own policy space with asymmetric and unconventional policies, ostensibly intended to deal with the policy rate touching the lower bound. they have triggered a variety of imbalances that are making fighting inflation harder today. " more purposeful and less interventionist central banks would probably do better than a high - inflation, high - debt, low - growth world ( rajan, 2023 ). for central banks, less can mean more. therefore, our strategy in the czech republic is " higher for longer ", i. e. to maintain interest rates at higher levels for longer. regarding government debt, i stated that monetary policy is at its tightest in 20 years and is slowing the economy. a problem arises if the government helps the economy with subsidies, supports and contributions at the same time. this counters our fight against inflation and the economy is not dampened as much as it should be. therefore, the cnb must consider the following : should we start competing with the government and dampen the economy by, for example, increasing rates? should we further push down demand, just to have it subsequently fostered by the government with some kind of supports or subsidies? and so on... it is a vicious circle. it would be better if both policies were anti - inflationary at the same time. cochrane ( 2003 ) describes these considerations, as does the excellent article on the subject presented by bianchi and melosi ( 2022 ) at the conference in jackson hole last year. to add to that, everything is

firms are fleeing to the euro – 47 % of new loans to firms are currently in euros. nevertheless, this channel is also gradually cooling as the ecb raises its rates. the volume of new euro loans to firms fell by 16 % in january – april. the decline in demand in the economy is documented by the following indicators : household consumption, which is crucial for the future course of demand - pull inflation, fell for the sixth consecutive quarter and is below the pre - covid level. the saving rate is now 21. 7 % ( data for 2022 q4 ), while the long - term average is 12 %. the decline in demand is also illustrated by the fact that prices of new apartments are already falling quarter on quarter. i want to emphasise that there is no wage spiral in the economy. the average nominal wage rose by 8. 6 % year on year in q1. nominal wages increased half a percentage point more slowly than expected in our may forecast, which expects inflation to return to the target in the first half of next year. the average real wage fell by 6. 7 %, decreasing for the sixth consecutive month. for comparison, the average wage at the cnb used to be linked to inflation. however, we managed to renegotiate this with the trade unions, and the average wage at the central bank rose by 4. 5 % this year. we are thus setting an example, not least by showing that inflation clauses can often be changed by agreement of the two parties. these are steps that can be taken to avoid a wage spiral. the decline in real demand means that the economy is below potential output and we have a negative output gap. interest rates are slowing growth in the quantity of money in the economy. inflation pressures are fading as a result. in the speech at the university of economics and business, i also mentioned two problems that are and will continue to be relevant : ( 1 ) the cnb's large balance sheet and ( 2 ) government debt. 3 / 6 bis - central bankers'speeches regarding the cnb's large balance sheet, over the last ten years, interest rates were too low, in fact zero for a long time. in addition, in early 2017, interventions led to an increase in the cnb's balance sheet within four months, or rather in the banking sector's liquidity. it increased from czk 1, 300 billion in december 2016 to czk 2, 300 billion in april