UPDATE 1-Czech c.banker says too early to make a rate call

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Czech central bank board member Vladimir Tomsik said on Thursday he needed a closer look at inflation pressures before making a call on whether interest rates should rise as soon as this month.

He said he needed to see staff analysis of inflation, which will be ready for the May 31 central bank board meeting, and his own deeper look at core inflation before making a firm stance on policy.

"We are waiting for the confirmation of inflation signals ... and an analysis of the staff of the development of core inflation and whether there is a risk of delay," he told Reuters on the sidelines of a conference.

"We are watching and closely evaluating the risk of a delay because the inflation forecast is consistent with a gradual rise of interest rates on the entire forecast horizon," he said.

Tomsik is seen as being on the dovish side of the central bank's seven-member board.

He and CNB Vice-Governor Miroslav Singer wrote in the daily Hospodarske Noviny on Thursday that the central bank is probably nearing a time when it will raise interest rates.

"It will primarily seek to meet the inflation target, and the possibility of a bubble bursting in an individual market will always be only one item among many other items of information which the CNB will take into consideration," the two bankers added.

The market perception is that the CNB could raise its policy rate by 25 basis points from 2.50 percent at the May meeting.

That would follow increases totalling 75 basis points between October 2005 and September 2006.

Investors raised their bets on a near-term monetary tightening after inflation hit a 7-month high of 2.5 percent in April -- above both market and CNB forecasts -- and the number of unemployed fell to the lowest for that month in eight years.

Tomsik told Reuters this month's rise in market expectations of a hike could mean that once a tightening comes, it will be already priced in and thus the risk that the currency will rise will be lower.

"The shift in market expectation was significant ... so a potential rate increase does not have to be a shock for the exchange rate," he said.

[PRAGUE/Reuters/Finance.cz]