(Repeats story published on Jan 28)
WHAT: Czech central bank meets on rates
WHEN: Feb. 3, decision at 1200 GMT, news conference 1330 GMT
REUTERS FORECAST: All 18 analysts expect the bank to keep
the key two-week repo rate <CZRP=> <CZCBIR=ECI> unchanged at a
record low 0.75 percent.
All analysts expect the next move will be a hike, with 12 of
18 forecasting a move as early as the second quarter and another
four expecting the move in the third quarter.
The main rate should rise to 1.25 percent in a year's time,
according to the median forecast in the poll.
FACTORS TO WATCH: Czech central bank Governor Miroslav
Singer said this week that inflationary pressures existed but
the strong crown currency was taming them, and it was impossible
to say when rates would start to rise.
The Czech crown <EURCZK=> has risen 3 percent already in
2011 and 9 percent since the beginning of 2010, helping check
price pressures that have emerged in the Czech economy.
Consumer prices rose half a percent on the month in
December, putting the annual inflation rate at 2.3 percent,
higher than expected by the market and above the mid-point of
the central bank's 1-3 percent target range. []
The bank will release its new quarterly forecasts after the
meeting. It surprised analysts in November with a forecast for
2011 GDP growth of only 1.2 percent, a sharp deceleration from
2.3 percent expected in 2010.
The bank cited government austerity as the main reason for
the sluggishness, but meeting minutes have shown that at least
one policymaker sees the forecast as too pessimistic.
The forecast implied rate tightening would start only toward
the end of this year.
The Hungarian and Polish central banks have already started
tightening cycles, while the Czechs have kept the main rate at a
region-low since May after a 28-month-long easing cycle in which
the bank reduced borrowing costs by a total of 300 basis points.
Eva Zamrazilova has been the lone voter for a rate rise at
the last three meetings, saying that loose policy was
appropriate during the financial crisis but that it was now time
to give a clear signal the crisis is over. []
Fellow board member Pavel Rezabek has also said low rates
are unsustainable in the long term, and said this month a rate
hike may come sooner than the bank's forecast suggests.
MARKET IMPACT: A more hawkish tone from the bank in its
press conference following the decision could help drive more
gains for the crown currency, and push up markets which have
factored in steady rates for the first half of the year.
Markets still expect up to three 25 basis point rate hikes
this year, and this could be scaled back if comments are more
moderate.
For TABLE: []
Czech central bank web site: www.cnb.cz
All Czech economic data: <ECONALLCZ>
Central and Eastern Europe market reports: []
(Reporting by Mirka Krufova and Jason Hovet; Editing by
Catherine Evans)
