* Poland, Slovakia, Romania and Serbia seen keeping rates
steady at interest rate meetings this week.
* Analysts say Czechs to also hold next week despite warning
of possible rate cuts.
* For rate polls, click on [] for Polish;
[] for Romanian; [] for Slovak;
[] for Serbian.
By Michael Winfrey
PRAGUE, July 28 (Reuters) - Emerging Europe's central banks
look set to keep interest rates on hold at meetings over the
next two weeks, although idiosyncratic factors may soon cause
countries to take different paths on monetary policy.
Policymakers in Poland and Romania, facing record strong
currencies and sliding euro zone demand, are seen staying put
when they meet Wednesday and Thursday, according to Reuters
polls, but they still face pressure from price growth.
Slovakia, which will adopt the euro on Jan. 1, is expected
to keep its cost of borrowing in step with the euro zone's on
July 29, the same day Serbia should stay its hand to see if the
strong dinar curbs price growth.
The Czechs, too, are seen staying on hold on Aug. 7, but the
record strong crown -- the world's best performing currency this
year -- and dovish comments from policymakers may mean a rate
cut is on the cards before the year end.
A few months ago, markets expected monetary tightening to
continue through December. Now analysts say currency
appreciation and a significant drop in demand for east European
exports in the euro zone mean rates will be on hold for the time
being.
"Against that backdrop, I think it's unlikely we're going to
see rate movements certainly in the next couple of months," said
Neil Shearing of Capital Economics in London.
The region is also expected to benefit from a dip in the
price of oil, which fell to a 7-week low of around $124 last
week on slowing global demand, and hopes of better-than-forecast
harvests, which will ease pressure on inflation.
Hungary cited the rise of the forint, which also hit an all
time high last week, as a factor behind leaving rates unchanged
at 8.5 percent on July 21 []. Some analysts say
there is a chance for a hike, but a Reuters poll sees rates on
hold this year.
DIVERGING TRENDS?
Polish inflation hit 4.6 percent in June, well above the
bank's 2.5 percent target. Unlike in the Czech Republic, price
growth there has been fuelled largely by domestic demand -- as
well as high commodity costs -- rather than administrative
measures whose effects will eventually wane.
But like others in the region, Poland's economy is slowing.
June retail sales were worse than expected, and analysts said
the central bank would assess its inflation and growth outlooks
before continuing to tighten rates from 6.0 percent now.
In Romania, the central bank expects the fading impact of
administrative measures to prompt a big dip in inflation in
October, from 8.6 percent now, but the rate outlook will largely
depend on consumer demand and oil prices.
"My forecast for Poland still prices in another 25 basis
point (hike) before the year end. The oil price is a key factor
because of large regulated price adjustments still ahead, in
addition to demand-led price pressures," said Raffaella Tenconi,
an economist at Dresdner Kleinwort.
"Romania is the same story: on hold, wait and see, but the
risk is that the next move is up."
The Czechs, however, have put hawkish rhetoric aside after
the crown hit an all time high of 22.925 per euro last week.
Several central bankers said the policy debate would switch
from raising interest rates to cutting, and Governor Zdenek Tuma
said the currency's <EURCZK=> 23 percent rise over the last year
could cause the central bank to undershoot its 2009 inflation
target of 3 percent, plus or minus one percentage point.
Market watchers said the statements were made mainly to keep
the currency from doing further damage to an economy already
hurt by a slowdown in demand for Czech exports in the euro zone,
although there was a chance of easing later this year from the
bank's level of 3.75 percent, the European Union's lowest.
"While we do not expect an immediate reversal of policy, the
outlook is shifting to the soft side," said Michal Dybula, an
economist at bank BNP Paribas.
"The Czech central bank is likely deliver a minor rate cut
before the year-end on improving inflation and deteriorating
growth prospects."
