(Repeats story published on Dec 12)
* Czech c.bank expected to cut by 50 bps on Dec. 17
* Three analysts see 25 bps move, two expect 75 bps
* Further easing seen at Feb meeting
By Jana Mlcochova and Mirka Krufova
PRAGUE (Reuters) - The Czech central bank is expected to
trim interest rates by a half a percentage point as the euro
zone recession begins to weigh heavily on the country's
export-reliant growth, a Reuters poll showed on Friday.
Policy easing by major global central banks and a rapid drop
in inflation further underscore the case for lower Czech rates,
analysts said.
All 15 analysts in the poll, taken between Dec. 10 and Dec.
11, said the central bank would cut at its Dec. 17 meeting in
what would be a fourth cut since August, when a tightening cycle
peaked with the rate at 3.75 percent.
Ten predicted a 50 basis point reduction, bringing the key
two-week repo rate to 2.25 percent, back to a level last seen in
since July 2006, and below the euro zone's 2.50 percent.
Czech inflation fell to 4.4 percent year-on-year in
November, down sharply from 6.0 percent in October, and well
below the bank's estimate of 5.5 percent.
A sharp drop in October industrial output also pointed to a
major contraction, while industrial prices dropped further than
expected [], data showed on Friday, further boosting
the case for monetary policy easing [].
"A bigger-than-expected-deceleration in industrial producer
prices, appalling industry, as well as other data released this
week, such as a drop in consumer prices, faltering exports and
weak third quarter GDP, point monetary policy only in one
direction at the moment -- downward," said Michal Brozka, an
analyst at Raiffeisenbank.
The Czech central bank had kept borrowing costs in the fast
growing ex-communist economy below those in the euro block,
somewhat taming the fast-appreciating crown.
But a December cut by 75 basis points by the ECB put the
Czech cost of money above that of the euro zone's for the first
time since early 2005. Czech central bank board member Robert
Holman has since said the move was among reasons for the Czechs
to ease too [].
Citibank analyst Jaromir Sindel agreed: "Reflecting Citi's
forecast of a further easing in the ECB's main interest rate to
1 percent in mid-2009, we expect a sharper reduction in (Czech)
interest rates."
The central bank could set a new historical low for Czech
borrowing costs by lowering them below 1.75 percent early next
year, he said.
Holman's comments added to dovish views express by fellow
central bank board members Mojmir Hampl and Vladimir Tomsik.
Vice-Governor Hampl told Reuters he would vote for a cut
this month [], and board member Vladimir Tomsik said
inflation was falling faster than expected, although he said he
could not estimate how much the predicted rate path would drop.
Governor Zdenek Tuma said he did not expect any surprise
after an unexpected 75-basis-point reduction last month, but
warned the bank's growth outlook may be too rosy [].
Central banks across the region have been cutting the cost
of money, following the world's major policy makers as the
economic downturn filters through to their economies.
Hungary hiked rates by three percentage points to defend its
currency in October but has since lowered them, last with a
surprise 50 basis point cut on Monday.
Poland's central bank ended its tightening cycle in November
with an unexpected quarter-point cut and is expected to ease
again this month.
Czech policy maker Pavel Rezabek, whom the market sees as
the biggest dove on the seven-strong policy board, will miss the
meeting.
For TABLE please click on .....................[]
(Editing by Andy Bruce)
