WHAT: Czech interest rates
WHEN: March 25, decision at 1200 GMT, news conference at
1330 GMT
REUTERS FORECAST: All analysts expect the bank to leave
rates unchanged at a record low. Nineteen analyst groups
participated in the survey. One saw a quarter point hike in Q2
or Q3, nine saw it in Q3, and seven expected it in Q4. Two
economists saw no change in rates this year.
FACTORS TO WATCH: The crown's <EURCZK=> upward march, and
most recent data including CPI, retail sales, and some elements
in the fourth quarter GDP data, all skew risks to the bank's
inflation forecast to the downside.
But nobody expects policymakers to cut rates further from
record lows.
The main two-week repo rate <CZCBIR=ECI> <CZRP=> is at 1
percent, on par with the eurozone benchmark rate <EUECBR=ECI>.
Governor Zdenek Tuma commented on the next developments in
rates after the last vote on Feb 4. saying rates may stay at
present level for some time and the next move, most likely in an
upward direction, may come in the second half.
Tuma usually does not comment on future moves in rates.
Vice Governor Miroslav Singer, the only one of the seven
members on the Governing Board to comment on rates since the
last vote, said on March 12 he doubted the bank's board would
prefer easing rates further to using other tools.
[]
Final fourth quarter gross domestic product reading
<CZGDPY=ECI> showed output actually rose and did not contract as
reported in a preliminary estimate. []
But private consumption was revised sharply down, showing
weak domestic demand and taking pressure off price growth.
Annual consumer inflation <CZCPIY=ECI>, targeted by the
bank, rose 0.6 percent in February on food prices, less than the
0.9 percent expected by the bank.
The crown has risen 0.8 percent against the euro since the
surprising GDP data on March 11. It has firmed by 3.9 percent
since the start of the year as investors prefer the CEE region
to the euro zone peripheral countries due to lower debt and
better growth prospects.
Jaromir Sindel from Citibank said the unit was boosted,
among other factors, by an elevated spread between the
three-month PRIBOR <> and EURIBOR <> rates,
something the bank will likely consider.
MARKET IMPACT: Unchanged rates are expected to have little
impact on markets. Investors will pay close attention to the
governor's remarks at a news conference after the decision, in
particular to those on the crown. There is a small chance he may
try to intervene verbally against the unit's strength, some
said.
For table with forecasts: []
Czech central bank website: www.cnb.cz
Governor Tuma at Feb 4 news conference []
All Czech economic data: <ECONALLCZ>
Central and Eastern Europe market report: <CEE/>
(Reporting by Mirka Krufova, writing by Jana Mlcochova;
Editing by Toby Chopra)
