* CPI, retail sales data more bullish than f'cast - Rezabek
* Expects board to debate economic, CPI growth at Feb mtg
(Adds analyst, details, crown)
By Jana Mlcochova
PRAGUE, Jan 12 (Reuters) - A rise in Czech inflation at the
end of 2010 may prompt the central bank to hike borrowing costs
sooner than its forecasts suggest, a policymaker who voted for
unchanged rates last month said on Wednesday.
Bank board member Pavel Rezabek reiterated past comments
that current low rates were unsustainable in the long term, and
said recent economic data, including retail sales, showed the
economy was performing better than expected.
His comments echoed hawkish views in neighbouring countries,
sparked by economic recovery and an uptick in inflation. Hungary
hiked interest rates twice late last year and a Reuters poll
published on Thursday showed Poland is likely to raise borrowing
costs as early as this month. []
An analyst said that despite the fresh data, the Czech
central bank, whose November outlook implied rates would not
rise from record lows of 0.75 percent until late this year,
should not tighten before the European Central Bank.
The ECB is not tipped to raise rates until the fourth
quarter of this year.
"The latest numbers coming out indicate that the Czech
economy is performing better than anybody had expected," Rezabek
told reporters after a parliament's budget committee meeting,
pointing to the strong November retail sales reading.
He said domestic inflation which rose to 2.3 percent in
December from 2.0 percent in November -- slightly above the
central bank's forecasts for 2.2 percent and above the 2 percent
midpoint of its target -- showed the bank could act sooner on
rates.
"The latest inflation figures show that the reaction could
be faster than originally signalled in situation reports," said
Rezabek, adding he expected the board would debate the data at
its next meeting on Feb. 3.
Rezabek said the outlook for developments in Europe was also
more optimistic, with budget consolidation within the European
Union remaining the only uncertainty.
DEMAND IN FOCUS
Czech retails sales grew by 5 percent in November, double
analysts' forecast, driven by car sales. []
Minutes from the Dec. 22 rate-setting meeting showed at
least one member of the board identified the year-end retail
sales data as a significant indicator of future household
consumption trend and of a potential renewal of inflation
pressures.
BNP Paribas' economist Michal Dybula said in a reaction to
Rezabek comments the retail sales print was strong, but it came
after a number of highly disappointing releases, while PI was
only driven by higher fuel prices.
The strong crown <EURCZK=>, which firmed 2.5 percent so far
this year, would act as a disinflationary factor in 2011 and so
would the government's austerity measures, which along with a
pick up in unemployment pointed to weaker consumption, Dybula
said.
"I expect the CNB (Czech central bank) to continue following
the ECB moves as was the rule in the past, that is not to hike
before the ECB does," Dybula said.
The crown firmed to 24.400 per euro at 1150 GMT from 24.425
ahead of Rezabek's comments.
The central bank kept rates on hold at the December meeting.
It said then that mounting uncertainty about how the euro zone
debt crisis will play out, together with factors such as
commodity price growth and recovery in Germany, meant the
direction of its next interest rate move was unclear.
The bank has held its main two-week repo rate at 0.75
percent since last May.
Rezabek voted for stable rates at the December meeting, with
only Eva Zamrazilova voting for a hike.
Rezabek's six-year term ends a few days after the bank's
February meeting, although he may be reappointed.
(Reporting by Jana Mlcochova, writing by Jan Lopatka, editing
by John Stonestreet)
