HIGHLIGHTS-Czech central bank monthly news conference

...conference on Thursday following a decision to hold interest rates steady after 25 basis point hike in May. For a news report on the decision, click on [ID:nL28398864].

ON THURSDAY'S RATE DECISION:

"The debate led towards an assessment that (risks to the inflation forecast) are heading in the pro-inflationary direction, but the arguments were not as strong as to make us decide immediately (to hike rates) and we will see what stance will we take next month. It is without any doubt that the new forecast will play an important role in our decision-making next month.

"We do not have a feeling we are falling behind the curve. The situation is not such that we would have a feeling we need to hike meeting by meeting.

"There was a little bit of worry that (a rate hike now) could be viewed as a panicky reaction because the exchange rate happened to weaken slightly just now."

ON WHETHER 50 BASIS POINT RATE HIKE MAY BE CONSIDERED:

"I cannot rule out that a board member will come up with a proposal to discuss a bigger rise than by quarter of a percentage point. I assume that in such a case it would be about raising rates by 50 basis points.

"As for me, I am rather in favour of smaller moves and we have usually taken smaller steps ... if there are gradual changes which are manage to successfully predict, than the adequate reaction is to move in smaller steps, which is usually 25 basis points. However, it may happen that the economy is hit by a larger shock, which requires a quick and stronger reaction of monetary policy.

"I cannot foresee the timing and the size of an increase in interest rates. Should the forecast point at a sharper rise in interest rates, I cannot rule out discussion about a different rise than by 25 basis points."

ON POLICYMAKERS' ABSENCES AT PAST THREE MEETINGS:

"So far I expect that we should meet in the complete makeup next month.

"I am not in a position to tell whether this impacted our predictability or not, but as far as my knowledge and conscience is concerned, I can say this had no impact on the decisions that we have taken in the past several months."

ON ECONOMIC AND INFLATION DEVELOPMENTS:

"Also most recent numbers confirm robust growth in the Czech economy.

"The main growth stimulus remains household consumption.

"The labour market took a centre stage at today's debate ... and it will clearly belong to the areas which we will be watching closely in the coming months."

ON NEXT MONTHLY MEETING IN JULY:

"I am not going to paint the forthcoming changes or development in interest rates. I will in no way preconceive decisions of the bank board.

"Today, the risks are pro-inflationary. I cannot guarantee that we will view them in the same way also next month, we do not know what will happen in between."