Czech c.banker against premature rate hike -agency

...quoted as saying in an interview with Dow Jones Newswires published on Thursday.

Rezabek told the news agency that while the key role of the central bank is to maintain price stability, it also should support the government's economic policy.

"I am against unnecessarily strict monetary policy," Rezabek, who rarely speaks in public on interest rates and is viewed as a dovish member of the seven-strong CNB board.

He said monetary policy had been too tight in the past which has resulted in annual inflation below the central bank's target over the last five years.

He said a premature rate increase could force the CNB to cut again in the not-too-distant future.

Central bank policymakers have been split over whether further urgent tightening is needed after a 25 basis point hike in May, given the strongest growth in household spending in 3 years and the risk of inflation topping the 3 percent target this year.

But many investors have bet this week's slide in the crown to 14-month lows has raised the chances of another quarter-point rate hike to a near 5-year high of 3.0 percent as early as July.

Rezabek said a spike in long-term interest rates in the U.S. and Europe to multi-year highs in the past several days highlighted the vulnerability of the crown and may lead to capital temporarily fleeing central Europe.

The record 125 basis point gap between the Czech Republic's 2.75 percent policy rates and the higher euro zone equivalent has dampened the crown's allure despite robust fundamentals and much faster economic growth than in Europe's single currency area.

However, Rezabek said he believed the crown would return to its long-term appreciating trend.