HIGHLIGHTS-Czech central bank monthly news conference

...following a decision to keep interest rates flat, as expected by the market.

ON THE INTEREST RATE OUTLOOK:

"It should still be valid that in the longer term, the forecast is consistent with interest rate growth. However, in the shorter term, a longer period of interest rate stability is expected compared with the previous forecast (in October).

"This (January) forecast is consistent, roughly with stability of interest rates in the nearest period, the nearest months...in the longer term rates should gradually rise.

ON THE CROWN CURRENCY:

"Arguments can be made in both directions. The exchange rates (in the region) have corrected, and we will see how the situation develops further.

"At present, the crown is a little weaker versus the assumption in the (January) forecast.

"At the same time, I would like to add that there is no strong conclusion to be drawn from that. It is basically a technical statement."

ON INFLATION:

"There is a shift of the inflation trajectory downwards (in the new forecast).

"Still, even though the trajectory is shifting down, we expect that inflation should move above the inflation target point which we have at 3 percent."

ON THE FORECASTING MODEL:

"The prediction apparatus has changed, it is more sophisticated, we are including real wage costs better now.

"We believe this change of the model enables us to better capture the impact of the real economy on inflation development."

ON THE ECONOMY

"The Czech economy remains in the phase of quick growth, with the exception that the dynamics compared with the previous forecast are slightly lower."

For a news report on the decision, click on: [ID:nL25513531]

[PRAGUE/Reuters/Finance.cz]