UPDATE 1-Czech c.bank head notes tensions in labour market

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The tight Czech labour market could become a source of wage pressures on inflation, central bank (CNB) Governor Zdenek Tuma said on Monday in a remark that appeared to underline policymakers' tightening bias.

"There are relatively significant tensions on the labour market, pressures on wages to grow can be expected to develop," Tuma said in an opening address at a conference in Prague.

Tuma declined requests from journalists to comment on the outlook for policy.

This year's steady fall in unemployment, to a decade low of 6.2 percent in September, and growing evidence of a shortage of workers in the booming manufacturing and construction sectors have fuelled concerns about wage contagion at the central bank.

Tuma and his fellow policymakers are expected to meet trade union leaders this week for an annual consultation on the economic outlook, at a time when collective bargaining talks at companies are getting under way.

The CNB raised interest rates to 3.25 percent in August in the third such move this year, but a firm crown and uncertainty fed by the global credit crunch led policymakers to stand pat in September and signal a diminishing scope for more rate hikes.

The policy board is due to next review policy on Oct. 25 when its decision will be based on an updated quarterly inflation projection, which will take into account the crown's 4.7 percent rally against the euro since early July.

[PRAGUE/Reuters/Finance.cz]