* All ways open for monetary policy if risks materialise
* Backs outlook for 2011 GDP slowdown
* Full Insider TV interview: http://link.reuters.com/sak99q
By Jana Mlcochova and Jan Lopatka
PRAGUE, Dec 14 (Reuters) - Downside risks from the euro zone
debt crisis to the Czech central bank's outlook are increasingly
likely to accumulate and policymakers could loosen policy if
they materialise, Vice-Governor Mojmir Hampl said.
Hampl told Reuters in an interview that he was happy with
the bank's forecast seeing a marked slowdown in growth -- which
surprised analysts -- adding he saw risks building on the
downside of the bank's inflation outlook.
"The base-line scenario assumes that we will start
tightening conditions and I say that my personal assessment is
that I feel, more than in the past, that risks on the
anti-inflationary side will start accumulating," Hampl said.
He said the spreading of the debt crisis in the euro zone
periphery and its impact on the European financial sector were
the key risks.
"I can imagine, better than in the past, that all paths for
monetary policy are open, if the base-line scenario is not met."
Market rates show the bank's next move is likely to be a
rise in its main interest rates from the current record low of
0.75 percent, but analysts are still watching the central bank
closely for signs on that timing.
Hampl voted for flat rates at the last meeting in November.
His comments add to the dovish stance by Vice-Governor
Vladimir Tomsik, who said in an article on Monday it was not
possible to rule out a rate move in any direction in the future.
Other central bankers have spoken in favour of higher rates.
[]. The bank next meets on policy on Dec. 22 and
the market expects no change.
Hampl said he was happy with the bank's 1.2 percent growth
target for 2011, which surprised many economists for being too
conservative.
"The slowdown... is created by tightening of fiscal policy,
and we also counted on a slowdown abroad," he said.
"The thoughts of a small slowdown in the restocking cycle
and that fixed investment will not be coming yet are also
relevant."
The bank estimates that the government's fiscal
consolidation drive, targetting deficit of 4.6 percent next year
after 5.1 percent expected in 2010, would take 0.8 percentage
points off 2011 growth.
EURO ZONE A MOVING TARGET
Hampl said he expected the euro zone would survive the debt
crisis, albeit at a considerable cost and would probably move
toward a fiscal union with fiscal transfers.
"I think the euro zone will survive... but the price will be
that it will have to get the second leg, a fiscal leg," he said.
Hampl, always a critic of joining the euro any time soon,
said fiscal guarantees which could affect the Czech Republic if
it joined the euro would raise the risks of euro adoption.
"The question is whether the fiscal transfers would affect
Czech public finances to such a degree that the Czech Republic
would lose its adjustment capability," he said.
"From the perspective of purely fiscal policy and stability
of public finances there are big question marks how this would
affect the long-term debt and fiscal profile of this country."
European leaders meet on Thursday and Friday to discuss ways
to solve the debt crisis and Germany said it was open to a
discussion on whether countries that share the euro should
harmonise their fiscal policy. []
The Czech Republic does not have a euro entry target and the
centre-right cabinet does not plan to even set one by the end of
its term in 2014, effectively delaying potential adoption at
least until late in this decade.
(Editing by Patrick Graham)
