(Bloomberg) -- Czech policymakers are likely to discuss slowing the pace of monetary easing this month after cutting interest rates by half a percentage point at the last three meetings, according to the central bank governor.

Officials in Prague are calibrating policy to reflect an inflation slowdown to near the 2% target and the economy’s sluggish recovery from a shallow recession. 

Still, they have warned about risks from persistent growth in domestic services costs and prospects of the European Central Bank and the US Federal Reserve keeping rates at higher for longer.  

After reducing the benchmark rate to 5.25%, the Czech National Bank’s board on June 27 will be probably looking at repeating a half point move or making a reduction of 25 basis points, according to the transcript of a speech by Ales Michl posted on the central bank’s website Thursday.    

“Both options are open, and in both cases, we will still be in the restrictive territory,” Michl said in a speech to an economic conference in London. “Then we will be very cautious about further rate cuts.”

Michl reiterated his position that the board will assess new data at each meeting and decide accordingly. The easing process can be paused or stopped entirely at any time if consumer price growth, especially core inflation, deviates from the bank’s forecast, he said.

“We will stay hawkish and do everything we can to achieve long-term price stability and not trigger inflation,” the governor said.

The bank’s “hypothetical, model-based” level of the neutral nominal interest rate is 3%-3.5%, Michl said, referring to an economic theory describing the monetary-policy setting that’s neither restrictive nor expansionary.

“The closer we get to our neutral interest rate, the more likely it is that we will slow down or even interrupt the normalization of our policy,” he said. “We therefore expect interest rates to be higher than we have been used to over the last decade or more.”

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