(Adds Singer comments on euro, updates crown)
By Jan Lopatka
PRAGUE, Oct 26 (Reuters) - 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.
Governor Zdenek Tuma said on Thursday that the next rise could come "next month or it may come at the beginning of the next year", adding that he was not able to foresee the timing.
The crown firmed to a new all-time high of 26.97 to the euro <EURCZK=> 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 27.055 at 0914 GMT.
One trader said the crown may reach 26.800 very soon, levels even above the central bank's updated forecasts 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 than in January.
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."
NO RUSH TO EURO
Commenting on the outlook for euro zone entry, Singer warned that any quick fixation of the exchange rate could threaten price stability.
Czech businesses have been calling for a speedy euro entry to avoid further pressure on export sales from the crown's strength. The government has no entry target, but has said 2012 is the earliest possible date.
"In case the exchange rate is fixed -- and it is showing in many countries that have done it -- the pressures for convergence toward asset values in developed European Union markets ... only spill into higher inflation and other imbalances," he said.
"I think a number of Baltic economies unambiguously prove that, so if we fix the exchange rate, it will only show itself in the way that producer prices will rise faster, dramatically faster," he said. ((Reporting by Jan Lopatka, editing by Alan Crosby/David Stamp; prague.newsroom@reuters.com; Reuters Messaging: jan.lopatka.reuters.com@reuters.net; +420-224 190 474))
Keywords: CZECH CBANKER/
