PRAGUE, (Reuters) – The Ukraine crisis will cause an inflationary impact on Czech economic growth via increased energy prices. This was stated by Tomas Nidetzky, a vice governor of the Central Bank.

Nidetzky stated to Pravo that increased geopolitical uncertainty could also lead to risk-aversion. This will in turn cause weaker currencies, such as the Czech crown.

Nidetzky stated that the Czech central banks interest rates could rise.

Nidetzky stated in an interview that “I can envision that there will still be some moderate tuning [of rates]”,

He stated, “Then it’ll be more about the length of time that interest rates remain higher and when will we start to debate whether we would reduce them towards a neutral equilibrium at 3%.”

Czech National Bank increased its key 2-week repo rate 425 basis point to a new 20-year record of 4.50%. This includes 375 basis point worth of increases at the four previous meetings.

While inflation rose to 9.9% in January, this bank was the most active among its central European counterparts in dealing with sharp price rise.

Nidetzky stated that the Ukraine-Russian crisis created more uncertainty.

He said, “When I look at the crisis from an entirely economic perspective, I see it as uncertainty which will have an overall inflationary effect.”

“This conflict will propup inflation primarily via higher prices for gas and oil, and later on other energies.”