UPDATE 1-Czech c.banker says sees no significant CPI risks

...

PRAGUE, June 12 (Reuters) - Czech central bank (CNB) board member Robert Holman said on Tuesday that he sees no significant inflation risks in the economy after the CNB hiked key interest rates in May by 25 basis points.

Holman told Reuters on the sidelines of a presentation of the CNB's annual financial stability report that he will wait to receive the central bank's monthly situation report on the economy at a June 28 board meeting before deciding on whether he favours another rate move.

"Based on the information that are available to me, there are no significant pro-inflationary risks, especially after the latest increase in interest rates," he said.

"My picture about fast non-inflationary growth is still valid. I do not think it should change."

The Czech Republic has the lowest interest rates in the European Union, which it joined in May 2004, in spite of last month's increase which brought the key two-week repo rate up to 2.75 percent.

Markets expect the CNB to raise benchmark credit costs by another quarter-point to a near 5-year high of 3.0 percent, possibly as early as July, to help subdue inflation pressures and curb household spending, which has been rising at its fastest rate in more than 3 years.

"I will wait for the situation report (to be discussed at the June policy meeting) and I will perhaps read new information there and will form an opinion on the basis of that," he said.

The CNB said earlier on Tuesday in the financial stability report that the low cost of money, together with loose fiscal policy and asset price rises, could boost wage demands and give a further boost to consumption and debt expansion.

Holman said the inflexible and tightening labour market was probably the biggest risk to the inflation outlook. But, he added, it was not overly troubling because of worker immigration thanks to the country's attractiveness as an EU member.

He also said healthy economic fundamentals would help the crown currency overcome its interest rate disadvantage against major currencies and resume its long-erm appreciation trend. But he would not predict when this would happen or how strong the trend would be.