UPDATE 1-Czech c.bank chief says next rate move likely a hike

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PRAGUE, April 18 (Reuters) - Latest economic data have been rather pro-inflationary and the next interest rate move is increasingly likely to be a hike, Czech central bank (CNB) Governor Zdenek Tuma said on Wednesday. "When I look at numbers for the past month, not that there have been any dramatic changes, but all confirm a very solid condition of the Czech economy," he said.

"That can be interpreted as shifts in slightly inflationary direction, which does not mean that it should lead to any immediate decision, but I personally will approach the next (policy) meeting with a very open mind," he told reporters before giving a speech to a lawyers' association.

The remarks were more hawkish than Tuma's comments at a news conference after last month's monthly monetary policy meeting.

"These shifts have been slight but for me this confirms that the next move will be rather upwards," Tuma added.

A firm crown has helped keep inflation below the bottom end of the CNB's target since October last year, making it pause after raising the policy rate by a cumulative 75 basis points between October 2005 and September 2006.

Low inflation and the neutral central bank communication over the past weeks have led market watchers to predict that CNB policymakers would hold off on a further interest rate hike until at least July [CNB/INT].

Annual inflation quickened to 1.9 percent in March from February's 1.5 percent, but still held below the CNB's tolerance range of one percentage point either side of a 3 percent goal.

Last month, CNB policymakers voted unanimously to leave the benchmark repo rate at 2.50 percent, the lowest level in the European Union, after agreeing that they lacked strong arguments for either a rise or a cut.

They next meet on April 26 when they will unveil revised projections for inflation as well as economic growth, which one of CNB officials has said might be higher than the 5.3 percent envisaged for 2007 at the previous quarterly update in January.

Tuma said he did not yet know the new inflation forecast.

Gross domestic product (GDP) grew at a record 6.1 percent clip in both 2005 and 2006 on strong manufacturing exports, which have however been overcome by rebounding domestic demand as the main growth driver since late last year.

The strongest retail sales growth in 3-1/2 years in February, rising employment and a one-day strike over pay at the largest Czech company have heightened market concerns that rising labour costs and household demand may spur inflation.

Minutes from last month's CNB policy meeting already noted policymakers were concerned the economy was drying up the pool of available workers and could push up wages even though no signs of wage-induced inflation had yet been detected in data.