UPDATE 1-Czech c.banker says he expects more rate rises

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The Czech central bank (CNB) is likely to raise interest rates further to tame inflation pressures in the strong economy despite the firming crown currency, CNB Vice-Governor Miroslav Singer said on Friday.

"It seems that the economy is close to equilibrium, in a phase slightly above potential. That means that inflation pressures are rising and we expect that we will be tightening monetary policy," Singer said on the public Radio Cesko.

He declined to comment on the expected timing of any policy steps.

The central bank left the key repo rate at 3.25 percent on Thursday but signalled more policy tightening as inflation picks up, despite the strengthening Czech crown.

The crown firmed to a new all-time high of 26.97 to the euro on Friday morning, driven by investors' flight from the dollar and the attractiveness of the crown which has a safe-haven status. It stood at 27.035 at 0823 GMT.

One trader said the crown may reach 26.800 very soon, levels even above the central bank's forecasts updated on Thursday.

The crown level is a key factors for inflation in the open Czech economy where import prices filter quickly into the cost of goods.

"The exchange rate at this moment is strong, quite significantly stronger than we had expected, but it is only one of the inputs into what we are doing," Singer said.

The crown has risen by 6.4 percent since this year's lows in July, but it is only 1.6 percent stronger since the beginning of the year.

Asked if the bank was considering intervention in the foreign exchange market, Singer said: "We are following whether the exchange rate is not moving too fast. We could potentially try to intervene if this was the case, but I must admit I have not heard the intervention word for a long time."

[PRAGUE/Reuters/Finance.cz]