PRAGUE, May 12 (Reuters) - The crown currency is the main uncertainty for the Czech central bank’s inflation outlook and there would be greater room to tighten monetary conditions with interest rates if it remained weaker than forecast, minutes of the bank’s May 4 showed.
The minutes, published on Friday, also said there was “consensus that the tightening of the interest rate component of the monetary conditions in the second half of this year should be gradual so as to ensure, among other things, that it did not lead to an increase in credit risk.”
The board saw risks to its new inflation forecast as being slightly inflationary, the minutes said. It was also said current data and the forecast were indicating inflation was sustainable for fulfilling the target in the future thanks in part to the favourable labour market. ** For TEXT of the central bank’s minutes: ** Czech central bank watches crown in debate on when to lift rates (Reporting by Jason Hovet and Robert Muller)