PRAGUE, June 2 (Reuters) - Following are Czech central bank Vice Governor Miroslav Singer's remarks from a Reuters interview on Wednesday:
For Story please double click on............[]
SAFETY NET, EURO ZONE SITUATION:
"The fiscal response seems to be stricter than forecasted, monetary loosening was also sort of deeper than expected, so the result is balanced."
RATE CUT DECISION, OUTLOOK
"We were discussing that we might be sending a signal to the markets, and the question was, are we going with a cut to provide the market assurance that we think that, for the Czech Republic, things are pretty much as usual no matter what happens in, quite frankly, not that significant a southern economy, with all respect to its beauty (Greece)."
"That was essentially the argument for a cut."
"Everything pointed to a cut, and the cut, regardless of short-term events, was long overdue, since in case we would have had rates a notch lower, nobody would bother proposing a hike. That was probably quite clear."
"Or, the counterargument was that we could push the crown to much weaker territory because of increased risk aversion and because people do not read Czech fiscal data and debt data. In the end we sort of decided to play it as normal, and the crown development sort of justified the opinion that there was no need to worry about Greece in our decision-making."
Asked: do you think it's more difficult to cut now?
"For the board, it's more difficult to cut. I still feel this. We have a historically unprecedented low rate. In my opinion we should react in a sense normally, but such a decision would be more difficult to achieve in our board."
LIMITED ROOM
Singer said that the CNB policy rates could be so far compared to an object falling in a glass filled with water and jelly. The rate of decline of the object would slow at the bottom of glass as the object would reach the jelly.
"It's very difficult to achieve the bottom when it's jelly, and we are more in the jelly."
"It's not related that much to what is happening. It's more reflecting that going to zero is difficult, as other central banks have shown, now that it's in the jelly."
"For me it's probably not that much jelly as for other board members. But for the purpose of forecasting of next step of the board, we are in the jelly."
"We actually have pretty reasonable recovery data. Asia doesn't seem to be doing that bad, eastern Europe seems to be bottoming out of crisis, or is braking the fall, in a sense. Even some Western economies are showing signs of recovery."
"Maybe... we will simply stay here for a while and then start moving up, it's perfectly imaginable."
ON STRING OF EVENTS SINCE LAST RATE MEETING
"There has not been an event that would force me to think that something should be changed. Things are moving pretty much in a way that we expected."
"For this board it's more and more difficult (to cut)."
ON MARKET RATES IN EUROZONE
"For me the crucial thing is to be aware that official euro rates are not driving several market rates. A lot of market rates are below euro rates."
"But I am more concerned about the general demand effects than trade on forex market or derivate market."
"The general rates situation makes the short CZK long EUR (trade) or any similar scenario much less attractive than what one would think just observing our rate and the ECB rate."
"Still we do care about the demand situation in the euro zone as a major exporter."
WHAT COULD AFFECT POLICY?
"One can now imagine something coming out of the euro zone, but I would say if something like this happens, it would probably be the element of summer or fall or next year."
Then we will have to decide. But I don't think anything strong is going to happen this week or the week after the next."
"The first growth impulse is supposed to come from exports and related things such as export output, lowering unemployment, higher demand, and etc."
"That probably means that if the euro zone goes down, or the crown goes up, these things would put this scenario at risk and have consequences."
"Nothing like this is now on the radar. It might change in the future."
ON RISK OF FISCAL OVERTIGHTENING:
"Fiscal over-consolidation risk has a tendency to correct itself. That would not be true for big global economies but this is what happens here."
"This self correction of macro policies small open economy is what happened in 2000-2001."
"What is really desirable is to return to conservative (fiscal) policies."
IMPACT OF ELECTION
"It hardly changes the monetary policy outlook, it does not change it dramatically. It can change it in a subtle way that is barely identifiable in one monetary decision."
"The coalition may find a common programme in something that will not be that radical."
"We always had coalitions across centre
