PRAGUE: Following are comments from Czech central bankers ahead of a policy meeting on Thursday expected to hold off on a rise in interest rates due to signs that demand led pressures on inflation remain subdued.
Economist expect the next move in the two week repo rate to be a quarter point hike, with 12 forecasting it will come by June and 6 in the second half of the year.
One expects the rise in January 2012.
BOARD MEMBER PAVEL REZABEK
"I would expect slight monetary policy tightening earlier than indicated in our latest forecast."
"I'm prepared for a hike, because I do not find such low rates favourable for overall longer term economic stability."
Czech inflation is currently "anchored at low levels," as salary negotiations indicate moderate wage growth for this year and "There are also expectations of persisting higher unemployment," Rezabek said.
"From this point of view, I do not see demand driven inflationary pressures in the Czech economy."
"For me, demand pressures are the main risks in terms of inflation, and since there are no such risks visible in the near term, the question is when to tighten monetary conditions."
"The market appears to be thinking we will automatically follow the ECB," Rezabek said.
"The relation between the ECB and Czech monetary policy is not that automatic, the Czech economy is in a different situation than the euro zone." Story.
GOVERNOR MIROSLAV SINGER
The Czech economy has the prerequisites to return to relatively swift growth and could reach the pre-crisis GDP level around the end of this year, he said in a presentation.
"Most indicators show that the Czech economy is on a recovery path, this recovery is driven by exports and industry."
He also said demand in the economy, driven by exports of its industrial goods to richer Western countries, remained subdued.
Cost inflation pressures were rising but were partially compensated for by the crown currency's firming, Singer said.
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