Czechs Hoard Inflation Bonds as Fear of Runaway Prices Grows

(Bloomberg) -- Czechs piled into government bonds offering protection against inflation, an evidence of growing concerns about consumer prices getting out of control that prompted aggressive interest-rate hikes.  

With costs of goods and services rising at the fastest pace in 13 years, the government sold by far the largest amount of its inflation-linked retail notes, according to Finance Ministry data published Thursday.  

“This enormous demand is yet another sign of rising inflation fears in the economy,” said Jakub Seidler, chief economist at the Czech Banking Association in Prague.

The latest issue, which offered six-year notes maturing in 2028, was the last opportunity to buy such bonds, at least for now. Finance Minister Zbynek Stanjura, a member of the new cabinet that’s focusing on cutting budget deficit, said the program will be suspended as the government reviews its financing strategy.    

The central bank has pledged to continue its unprecedented monetary-policy tightening this year after lifting borrowing costs by 3.5 percentage points since June.

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