* Cbanker Hampl: Unsure how to vote at May rate meeting
* Sees no good news for Czech Rep. from global economy
* Says economic picture looks worse than Jan assessment
By Jana Mlcochova and Adam Cox
PRAGUE, April 24 (Reuters) - The Czech Republic faces a
darker economic environment than a few months ago but the
central bank's careful approach has given it room to manoeuvre
on interest rates, a top central banker said on Friday.
Deputy Governor Mojmir Hampl, in an interview with Reuters,
said he had not decided yet how he would vote at the bank's next
policy meeting on May 7 as economic uncertainty was enormous.
"I am not sure, I will not be able to tell you right now how
I am very likely going to vote at the next meeting," Hampl said.
Hampl, an economist who at 34 is one of the central bank
governor's two top lieutenants, has recently been voting more in
line with others on the seven-person policy board after
previously calling for higher rates last year before the
economic crisis turned economic conditions upside down.
He declined to specify how much room he saw for monetary
policy easing in the current easing cycle but said it was lucky
the Czech bank still had room to manoeuvre.
"There is some room for manoeuvre in the monetary policy in
the Czech Republic, thank God for that. I hope that some space
for manoeuvre will remain also in the future," Hampl said.
Czech policymakers have trimmed interest rates by 200 basis
points since August to boost an economy heading toward
recession. They left them unchanged at a record low of 1.75
percent, above the euro zone's 1.25 percent.
Hampl said he never liked the idea of looking at central
bankers as being hawkish or dovish and that he -- and all his
colleagues -- based decisions on the best information at hand.
"Of course decision-making is influenced by many other
factors," he said, noting psychology could come into play. "At
the end of the day, we are seven people, not seven computers."
DIRE ECONOMIC PICTURE
The Czech economy has suffered since faltering demand in the
euro zone hit its export-reliant manufacturing sector, which is
dominated by the auto and electronics industries. Many forecasts
call for the economy to contract about 2 percent this year.
Industrial output plunged at a double-digit pace
year-on-year for the fourth month in a row in February, showing
the worst result on record.
Hampl said he saw few positive signs in the pipeline.
"What is really influential is the development in Western
Europe, particularly in Germany (and) there are not many good
pieces of news on the cards anywhere and this influences this
small open economy," Hampl said.
"If the question is: 'Can you identify any good news?' then
I would have to say, 'Well, I don't see much good news'," he
said. Asked whether conditions were worse than in January when
he gave a gloomy view, he said: "The outlook for growth mainly
due to the development outside is, I would say, more dire."
Hampl said uncertainty was so high at the moment he would
not overemphasise the importance of different forecasts and,
importantly, it meant that authorities might need to adopt
different economic models for viewing the world.
He expressed frustration with the level of global debate,
noting that issues such as executive pay or rating agencies were
getting plenty of attention but questions about economic and
fiscal policies before the crisis were not being discussed.
He said that what was clear was that tried-and-true economic
policies were important in good times and even more so in bad
times. "These standard textbook theories do work."
The Czech central bank targets inflation with a tolerance
band of 2 percent to 4 percent and will lower that target by one
percentage point as of 2010, in line with the euro zone. Annual
inflation inched up to 2.3 percent in March and the bank sees it
easing towards zero in the coming months before rebounding.
But a weak currency limits the scope for rate cuts, and many
analysts expect the bank to hold rates at the May meeting.
The crown <EURCZK=>, central Europe's best performer this
year, was 1.34 percent stronger at 26.75 to the euro since the
last rate-setting session on March 26 and 3.61 percent below the
central bank's full-year average forecast of 25.80.
(Editing by Stephen Nisbet)
