By Robert Muller and Jason Hovet
PRAGUE (Reuters) - The Czech National Bank may need to take a more gradual approach to raising interest rates while it assesses risks from abroad, and a slower pace would not be threat to meeting its inflation target, board member Oldrich Dedek said in an interview.
Dedek, the lone vote on the seven-member board against raising rates costs at the last monetary policy meeting, said he did not see evidence backing arguments that inflationar pressure in the domestic economy was starting to materialise.
He told Reuters he agreed with moving ahead with normalising policy, but he believed there should be debate on the pace.
"A somewhat holding tactic ... does not collide with meeting the inflation target. That is important for me," he said on Wednesday.
The central bank has raised its key two-week repo rate at its last three meetings, to 1.50 percent.
Since ending a four-year-old intervention regime keeping the crown weak in 2017, the bank has lifted rates from near zero in six steps, the most aggressive tightening in the European Union, as the European Central Bank and others in the region keep loose policy in place.
Markets see good chances of another hike this year, although central bank Governor Jiri Rusnok said the timing of the next move was uncertain after the last meeting, on Sept. 26.
Czech policymakers are contending with a fast-growing economy, the biggest wage increases in 15 years, the lowest unemployment in decades, along with home prices rising at one of the fastest rates in the EU.
Dedek said global risks, such as trade war escalation and uncertainty over Britain's exit from the EU, should be taken into account, even if they could not be completely factored into the bank's staff forecasts.
For example, he said, the rising risk of a hard Brexit could hurt Germany, which is the main Czech trading partner.
"To accelerate the (tightening) pace at the moment when global risks are growing, that may be a point to discus, that is why I eventually decided not to support raising rates (at the last meeting)," he said.
NO COMMITMENT
Dedek did not say how he would vote at the bank's next meeting, on Nov. 1, when new staff forecasts will be presented.
He said while it was not possible to completely factor in outside risks to the outlook, "the minimum could be to accept it via a bit more gradual approach to normalisation (of policy). To wait and see how the data will come out, whether the risks are really materialising."
He added: "But it is not about changing the philosophy of (our) monetary policy, it really is about the pace, knowing that a slower one does not threaten meeting the inflation target, which is the key issue for me."
On the crown, Dedek said its weakness has been caused by foreign risks, even though Czech economic fundamentals showed it should be strengthening.
The crown traded at around 25.83 to the euro on Wednesday. Its three-month average is 25.75 versus the assumption of an average third-quarter rate of 25.8 seen in the central bank's current outlook, which also sees it strengthening to 25.3 in the fourth quarter.
(Reporting by Robert Muller and Jason Hovet, editing by Larry King)
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