UPDATE 1-Czech c.bank delayed rate hike at June mtg -minutes

...

PRAGUE, July 10 (Reuters) - Czech central bankers agreed last month that inflation risks have risen over the past few months, minutes of their meeting showed, bolstering the market's view that interest rates could rise later this month.

Policymakers held off raising interest rates further on June 28, after a quarter of a percentage point hike in May, saying policy should avoid reacting hastily to a drop in the crown, which has sent it away from the central bank's forecast.

The minutes, released on Tuesday, revealed that some members of the policy board argued that new data could be seen as meaning less intense inflation pressure and that there was no significant risk involved in delaying a rise in interest rates.

As announced immediately after the meeting, four out of five board members present voted to leave the main two-week repo rate unchanged at 2.75 percent . The lone dissenter called for a 25 basis point rise.

The crown held broadly steady at around 28.650 to the euro at 0730 GMT, about 4 percent weaker in the year to date. Debt yields and money market rates were flat to slightly lower on the day.

The minutes appeared to lend support to analysts' views that policymakers preferred to wait to see a quarterly update of the staff inflation forecast before possibly backing a rate rise. That is due for review at the next policy meeting on July 26.

"The opinion was expressed that the new forecast might provide a new view of the future, that apart from the movement of the exchange rate to weaker values the situation in the economy had not changed qualitatively since last month, and that monetary policy should not react hastily to short-term exchange rate fluctuations," the minutes said.

The previous forecast in April saw annual inflation rising to 3.2-4.2 percent in December 2007, from 2.4 percent in May . The central bank has a 3 percent target, with a tolerance band of 1 percentage point either side of that level. (For full text of minutes, click on the code: [ID:nL10557119])