POLL-Czech c.bank seen keeping rates flat on May 7

                                
 By Martin Dokoupil and Mirka Krufova
                                
 PRAGUE, April 23 (Reuters) - The Czech central bank will
likely keep interest rates flat on May 7 after inflation eased
from a nine-year peak and with the crown holding near record
highs to the euro, a Reuters poll showed on Wednesday.
                                
 All 15 analysts surveyed expected the bank to leave the key
two-week repo rate <CZRP=> <CZCBIR=ECI> at a six-year high of
3.75 percent. The bank (CNB) has tightened credit costs five
times since last June.
                                
 Most market watchers saw the CNB staying put for the rest of
2008 due to the strong crown and slowing global growth, while
the remaining four still saw a 25 basis point rate hike in June.
 "While price pressure remains elevated, the continued
strength of the Czech crown does play against our expectation of
a further interest rate hike this year," said Lauren Van Biljon,
an analyst at 4cast in London.
                                
 Inflation soared to a nine-year high of 7.5 percent
year-on-year in January, partially due to tax changes, regulated
price increases, and energy and food prices rises. 
                                
 But adjusted inflation, a narrower measure reflecting
demand-side pressures, has also risen and central bankers have
raised concern about spillover of price rises in individual
sectors into other prices and inflation expectations.
                                
 The headline inflation rate dipped to 7.1 percent in March
and the central bank sees it returning to within the 3 percent
target +/- 1 percentage point in early 2009.
                                
 The crown has gained 11.6 percent versus the euro <EURCZK=>
and nearly 31 percent against the dollar over the past year,
scaling record highs against both currencies.
                                
 The unit stood at 25.12 per euro as of 1049 GMT, compared
with an all-time high of 23.0 seen on April 14.
                                
 Central banker Eva Zamrazilova echoed recent remarks by
several fellow board members on Wednesday, saying the crown's
firming in recent months was out of line with fundamentals in
the fast growing economy [ID:nPRA001880].
                                
 She also said the inflation situation remained significantly
unclear and ambiguous, with factors in both directions in play,
while fourth quarter 2007 data showed a clear drop in consumer
demand, which should soften demand-side pressures.
                                
 The crown's strength has become the dominant
anti-inflationary factor in the small, open economy, which has
expanded by more than 6 percent over the past three years.
                                
 Another is an expected deceleration in growth to 4-5 percent
this year due to weaker household spending.
                                
 "The continuing tight labour market is an inflationary risk,
although the expected economic slowdown in the second half of
2008 is likely to limit these inflationary pressures," said
Jaromir Sindel, economist at Citibank in Prague.
  (Writing by Martin Dokoupil; Editing by Michael Winfrey)