HIGHLIGHTS-Czech central bank monthly news conference

...Wednesday following a decision to keep interest rates on hold.

For a news report on the decision, click on [ID:nL20551907].

ON ASSESSMENT OF RISKS TO CPI OUTLOOK:

"The board took a simple stance on the inflation prediction: The risks are skewed in the anti-inflationary direction.

"The main uncertainties (to the forecast) are definitely on the anti-inflationary side."

ON UPCOMING QUARTERLY UPDATE OF CPI FORECAST IN JANUARY:

"Compared with the forecast, essentially all watched items of the CPI basket developed in a less inflationary way than we had expected. This applied not only to regulated prices, but also net inflation, food prices and the adjusted inflation (without volatile fuel and food prices and regulated items).

"The fact that these deviations were split evenly across the basket of course opens the thought about our January forecast.

"If we were to make the prediction in the current economic conditions, then I think the inflation forecast would look different, and markedly different would be also the implied interest rate trajectory (embedded into the inflation outlook).

"But I would very much resist saying what our next decisions (on rates) will be, both the January decision and also those in following months after that."

ON CROWN FIRMING TO RECORD HIGHS:

"Expectations (in the market) are apparently set for a further firming (of the crown), but it is difficult to find economic mechanics explaining why the crown should continue firming.

"We are looking at the analysis of the balance of payments and financial flows, and the arguments we find there rather speak against firming in the crown's exchange rate.

"If there is a sharp firming or a weakening in the crown ... it is not irrational to expect the exchange rate could correct."

[PRAGUE/Reuters/Finance.cz]