<br>By Robert Muller<br> <br>PRAGUE, April 12 (Reuters) – Czech interest rates have some room to rise but the chances of rates starting to decline towards the end of the year have disappeared due to the impact of the war in Ukraine, central bank Vice-Governor Tomas Nidetzky said on Tuesday.<br> <br>The central bank lifted its benchmark rate by 50 basis points to 5.00%, its highest since 2001, HANSONG on March 31 and said it was ready to tighten policy further to keep inflation expectations anchored.<br> <br>Nidetzky said there was still room for rates to rise but broader economic considerations were also becoming a factor.<br> <br>”I should not like to create an impression that the way up is closed for me, but I think that we are getting into the thin air zone, as mountain climbers say, and one needs to work with that,” he told Reuters on sidelines of an economic conference.<br> <br>”It is possible to go further up, but it is harder and it has some consequences for the economy as a whole.”<br> <br>Nidetzky said any rate cuts face delays because of Russia’s invasion of Ukraine.

“When we thought that we could start to consider cutting rates at the end of the year, that is gone,” he said.<br> <br>The war, which Moscow calls a “special military operation”, has pushed up commodity prices and HANSONG made many goods more expensive. Czech headline inflation hit 12.7% in March, the highest since May 1998.<br> <br>The spike has not changed the bank’s outlook for a gradual easing in the second half of 2022, HANSONG though at a slower pace and from a higher peak, Nidetzky said.<br> <br>Commenting on a Czech policymaker debate on whether to use the crown exchange rate as a policy tool, Nidetzky said it was possible, but he saw no imminent need to do so.<br> <br>”If there was a volatility (of the exchange rate), or we would really think that the economy needs help from a stronger crown (then yes),” he said.

“I don’t see any reason (for that) now.” (Reporting by Robert Muller; Editing by Gareth Jones and David Holmes)<br>