* Agrees with bank's fcast assuming rate growth from H2 2011
* Says faster German recovery could reopen rate cut debate
* Only disinflationary risk to fcast materialising
* Sharp contrast to other bankers eyeing rate rises
(Adds detail, quotes)
PRAGUE, Aug 31 (Reuters) - The government's progress in
fiscal reform plans may help keep inflation down and interest
rates low until the second half of 2011, central bank
Vice-Governor Vladimir Tomsik said on Tuesday.
Tomsik told Reuters in an emailed response to questions that
a faster recovery in Germany could lead to a stronger crown
exchange rate thanks to higher exports, and thus further delay
rises in rates or even reopen debate on cuts.
His remarks contrasted sharply with comments by three other
central bankers who have spoken in recent days in favour of
earlier hikes.
Czech rates have been at a record low since May. The main
policy rate, the two-week repo rate <CZCBIR=ECI>, is at 0.75
percent, the fourth lowest in Europe, and below the European
central bank's benchmark rate of 1 percent.
"Since (the last board meeting), in my opinion only the risk
on the anti-inflationary side is being fulfilled, because work
on the fiscal reform has been proceeding at a rather brisk
pace," Tomsik said.
"I personally agree with the trajectory of rates implied in
the latest forecast," he said.
The bank's August quarterly forecast is consistent with
stable rates around current levels and their gradual growth from
the second half of 2011.
The crown <EURCZK=> eased to 24.815 to the euro after the
comments from 24.807 earlier.
GERMAN IMPACT
Three of the central bank's seven-strong governing board
said over the past week rate tightening should be launched
sooner than implied in the bank's forecast.
Robert Holman said he expected a rate rise to 1 percent by
early 2011. []
A newcomer on the board, Kamil Janacek, said the period of
low rates was over and he expected a debate about a hike in the
fourth quarter. []
And Eva Zamrazilova said she wanted a discussion of a rate
hike "very soon". []
The interest rate swap (IRS) curve has flattened following
their comments, pricing in more chance of an earlier start to
monetary tightening, but markets do not seem completely
convinced.
Tomsik, who is one of two deputy governors and has been on
the bank's board since 2006, argued that faster growth in
Germany might paradoxically benefit the crown currency by
boosting Czech exports as well as just growth, also helping cool
inflation.
The board itself pointed to this as a factor in an extensive
discussion of the surprisingly fast pace of German recovery in
the second quarter.
Germany is the export-reliant Czech economy's main trading
partner, and the largest single export market, buying Czech
cars, car parts, steel and electronics.
"Not only does a stronger and faster recovery in Germany
pose the risk of a further delay in raising rates, but a return
to debating lowering rates cannot be excluded either," Tomsik
said.
(Reporting by Jana Mlcochova and Jan Lopatka; editing by
Patrick Graham)
