* Pick up in inflation to offset growth concerns
* Dec vote seen a tight call, like in Nov
* For TABLE please double click on []
By Mirka Krufova and Jana Mlcochova
PRAGUE, Dec 11 (Reuters) - The Czech central bank will
likely hold rates next Wednesday as signs of rising price
pressures offset concerns of protracted economic weakness, a
Reuters poll showed on Friday.
The bank has cut 250 basis point from borrowing costs since
August last year to kickstart an economy hit by vanishing
foreign demand, but markets have almost completely priced out a
chance of further cuts.
The poll showed 16 out of 19 analysts predicted the bank
would leave rates unchanged for a third straight meeting, with
the main two-week repo rate <CZCBIR=ECI> used to suck up excess
liquidity at 1.25 percent, a record low.
One of the sixteen saw a cut coming early next year, while
the others saw no more reductions. Three forecast a 25 basis
point cut.
Policymakers were split at the last two rate sessions, with
Governor Zdenek Tuma in a minority voting for a 25 percent cut
both times.
Board member Eva Zamrazilova from the stable-rate camp said
earlier this week she saw small room for a cut if there were no
CPI pressures on the horizon.
Analysts said another tight vote was likely in the last rate
setting session this year as data brought reasons for both
stable rates and a cut.
"We believe that high degree of uncertainty requires
cautious approach and cutting rates by another 25 basis points
would have limited impact with the 2-week repo rate already at
all time low," said Piotr Matys, an analyst at 4Cast.
Consumer inflation was 0.5 percent year-on-year in November,
above the bank's forecast of 0.1 percent, which analysts said
supported stable rates, along with the favourable third quarter
real wage development. <CZ/ECON15>
The economy contracted 4.1 percent annually in the third
quarter, but grew on a quarterly basis. But it showed faltering
domestic demand with growth chiefly due to inventories and
government consumption, backing arguments by cut defenders.
CSOB analyst Petr Dufek said inflation, deeply below the
bank's target of 2 percent plus/minus one percentage point, was
not a threat. Rather there was the treat of a double-dip
recovery.
"The result of the vote is totally uncertain," Dufek said.
He forecast a 25 basis point cut.
Wage development was neither a reason not to cut as the pick
up in wage growth was due to the fact that many low earners lost
jobs in the crisis, distorting the statistics, he added.
But analysts also say extra spending in the 2010 budget will
give consumers more money, adding inflationary pressures, and
supporting the case for stable rates now.
All seven Czech central bank board members will attend the
December meeting and analysts said the vote not to cut could,
like in November, be a tight 4-3 majority.
The bank changed rates in December only once over the past
decade, in 2008.
(Writing by Jana Mlcochova; Editing by Andy Bruce)
