Low inflation and renewed confidence in the koruna accompanied a return to worthwhile saving, a governor said in a speech published by the Bank for International Settlements on Oct. 20.
The governor linked those conditions to a continued hawkish policy stance, saying mortgages would be more expensive than people had become accustomed to.
The BIS published the remarks under the title “The Central Bank. Trust. Daft Punk.” in its central bankers’ speeches series.
The governor said the central bank’s role was to maintain low inflation and confidence in the currency, while conducting monetary policy that made saving worthwhile over the long term.
“But low inflation doesn’t come for free,” the governor said. The pledge to remain hawkish accompanied that qualification, connecting the commitment to low inflation with the prospect of more expensive mortgages.
The governor said trust had returned and described the renewed incentive to save as a change from earlier conditions. Trust must be measured rather than declared, the governor said.
The remarks supplied no inflation rate, mortgage rate or measure of trust, and gave no dates for the comparison between earlier and current conditions. The governor described the change without specifying its magnitude.
The governor used music to explain the intended role of monetary policy, comparing the central bank’s task to maintaining a steady beat while other musical elements changed around it.
“A central bank should not play the melody of the economy either,” the governor said. Keeping the beat meant keeping inflation low and confidence in the koruna high, the governor said.
The musical comparison drew on Daft Punk, which the governor said had become an interest in the late 1990s. The governor described a tempo holding steady as instruments entered.
Synthesiser, drums, bass, guitar and keyboards joined before an orchestra, the governor said. The account connected that steady tempo to the central bank’s responsibility for monetary policy.
The governor traced an interest in numbers and mathematics to the ages of 15 and 16, saying the ambition then was to work in a bank and understand money.
The governor recalled living in a 13-storey prefabricated block on Prague’s Dědina housing estate, near the airport. Concerts at Delta, an underground music club there, prompted an interest in music, the governor said.
The governor described progressing from cassette equipment to portable digital players and, eventually, AirPods. The personal distance between the teenager in the apartment block and the governor was secondary, the governor said, adding that music remained a source of learning.
