(Repeats story published late on Tuesday)
PRAGUE, Sept 14 (Reuters) - Current record low Czech
interest rates would be more appropriate during a crisis than at
the present stage of economic recovery, central bank board
member Pavel Rezabek said on Tuesday.
Three other members on the seven-member monetary policy
board have spoken in recent weeks about a possible need for
tighter policy, raising the possibility the Czech central bank
will start raising rates sooner than its forecast for roughly
stable rates into the second half of 2011.
"The outlook for the next year is even more optimistic than
for this year and I think that the present setting of rates in
the Czech Republic is a setting within a crisis situation,"
Rezabek said.
"But the Czech Republic is not in such a situation."
However, Rezabek, who voted against the last two rate cuts,
in December and May, declined to say how he would vote on rates
at a meeting on Sept. 23. He said he saw value in keeping past
decisions in place for some time in order to bring stability to
markets.
"I accepted the decision (to cut), and the decision should
last for a certain time, with the aim of bringing less
uncertainty to financial and corporate business," he said.
Borrowing costs have been at a record low since May. The
main repo rate <CZCBIR=ECI> stands at 0.75 percent, the third
lowest policy rate in Europe alongside Sweden, and below the
European Central Bank's benchmark rate of 1 percent.
STABILITY HAS VALUE
Rezabek said he valued stability even if rates may be at a
different level than was his personal preference.
"At a time when the global financial crisis is ending, it is
necessary that monetary policy works as a stabilising element
rather than haggling over whether we cut or raise now," he said.
The decision to bring rates to present levels should be
valid for some time, he said, even if he was not "overly happy"
about their level.
He said cuts in the repo rate below 1.25 percent did not
translate well into lower market rates.
Other board members Eva Zamrazilova, Robert Holman and Kamil
Janacek have spoken in favour of possibly tightening policy
sooner than implied by the bank's forecast, although Janacek
later softened his comments. []
Vice-Governor Vladimir Tomsik on the other hand said late
last month that his views were in line with the forecast.
[]
The crown firmed to a 22-month high of 24.52 to the euro
<EURCZK=> on Tuesday.
The hawkish talk by some Czech central bankers comes at a
time when major central banks, including the ECB and the U.S.
Federal Reserve are reassuring markets their quantitative easing
measures and loose policy will continue, to calm fears of a
second output dip and deflation.
Rezabek said economic data showed the recovery was on track
and there would probably not be a double dip.
The Czech economy accelerated in the second quarter, growing
0.9 percent from the previous quarter, helped by rising domestic
consumption. The central bank forecasts the economy will grow
1.6 percent this year, reversing a 4 percent decline in 2009.
Inflationary risks are slowly emerging, he said, pointing to
the expected rise in power prices and food prices, among others.
But he said he did not see any significant demand pressures in
the near future.
(Reporting by Jana Mlcochova; Editing by Susan Fenton)
