HIGHLIGHTS-Czech c.bank chief's monthly news conference

...bank's monthly monetary policy meeting which left interest rates unchanged, keeping the two week repo rate at 3.25 percent.

For main news report, click on [ID:nL27772602]

ON IMPACT OF GLOBAL TURMOIL

"That is a big question mark, no one is able to say today how big an impact the uncertainty on global markets will have."

ON INFLATION AND INFLATION RISKS:

"Overall the risks are rather pro-inflationary if we look at overall inflation and it is the opposite for monetary policy inflation."

"We believe that the lower-than-expected inflation (in August) was to a certain extent caused by methodology changes by the statistical office, and it may well happen that there will be a correction during the autumn, so I am very curious about the nearest inflation number."

ON FISCAL OUTLOOK:

"It seems that fiscal restriction in 2008 may be higher than we had originally assumed."

ON IMPACT OF TAX CHANGES AND REGULATED PRICES:

"Overall inflation of course is relevant (for policy decisions).

"If overall inflation is driven upwards by primary changes of indirect taxes, or regulated prices, then we should react to the secondary impact.

"Monetary policy inflation is what we react directly to... and that is below our forecast.

"If we make the assessment that perhaps the secondary impacts (of indirect tax changes) are not very significant, then yes ... theoretically it could lead to, for example, the trajectory of interest rates in the next forecast possibly being somewhat lower than it was in the previous one."