(Repeats story published on June 28)
WHAT: Czech central bank meets on rates
WHEN: Aug 5, decision at 1100 GMT, news conference 1230 GMT
REUTERS FORECAST: All 17 analyst groups polled by Reuters
expect no change in interest rates. Analysts said the next move
would be a 25 basis point rate rise. Four analysts expect a hike
by the end of 2010, and 12 see a hike in the first half of 2011.
The main two-week repo rate <CZCBIR=ECI> <CZRP=>, used to
drain excess liquidity, stands at a record low 0.75 percent
after being cut in May.
FACTORS TO WATCH: Inflationary pressure has remained
subdued, with consumer prices flat on a monthly basis in June,
putting the annual inflation rate at 1.2 percent, above an
earlier central bank forecast of 0.9 percent.
But the bank said adjusted price growth excluding fuel and a
range of other items remained negative, reflecting the
disinflationary effect of import prices and dampening inflation
pressures within the domestic economy.
Unemployment fell for the fourth straight month in June to
8.5 percent of the workforce, and May retail sales rose a
faster-than-expected 3.0 percent. Analysts say the labour and
household situation remains weak in the Czech Republic, which
faces a risk of fiscal tightening by a new centre-right
government.
The crown <EURCZK=> has gained 2.7 percent since the last
rate meeting on June 23, climbing to a 3-1/2 month high near
25.00 to the euro, a level where central bankers have verbally
intervened in the past to protect export performance.
The crown is a tad stronger against the euro than the
average 2010 exchange rate of 25.30 forecast by the central
bank. The bank is due to release its new quarterly forecasts,
which analysts will be looking at closely.
New central bank governor Miroslav Singer told Reuters on
July 8 that interest rates will likely stay on hold for longer
than earlier thought. []
Singer was echoing comments by vice governor Mojmir Hampl,
who said "new growth-hurting and inflation-decreasing
developments, or at least new sources of uncertainty, have
emerged, especially in the euro area." []
MARKET IMPACT: Dealers say swaps and forward rate markets
are pricing in flat interest rates for the rest of 2010, with
expectations for a rate rise coming at the start of 2011. Bond
and currency markets typically react little to interest rate
decisions, but a more hawkish tone could see the crown firm up.
For table....................................[]
Czech central bank website........................www.cnb.cz
All Czech economic data..........................<ECONALLCZ>
Central and eastern European market report............[]
(Reporting by Mirka Krufova; Writing by Jason Hovet; Editing by
Hugh Lawson)
