* Czech Feb inflation below expectations at 1.7 pct yr/yr
* Romanian inflation above forecast, quickens to 8 pct
* Czechs seen maybe raising rates in Q2, Romania rates flat
(Adds Czech c.bank, cbank gov comments)
By Michael Winfrey
PRAGUE, April 11 (Reuters) - Inflation cooled in the Czech
Republic but surged in Romania in March, strengthening the cases
for both countries to keep rates on hold despite significantly
diverging price pressures.
After the European Central Bank's move to tighten monetary
policy last week in the face of rising global commodity prices,
markets are closely watching central banks in the European
Union's emerging east for signs they may follow.
But aside from Poland, where policymakers hiked rates by a
quarter point last week, most look to be on hold for now, with
the Czechs probably putting off a hike because of weak demand
and the Romanians avoiding previously expected cuts as food and
fuel prices hit consumers' wallets more than expected.
Although pressure from global commodity prices has hit all
of the EU's emerging east, these have had varying effects across
the region, with the much more developed Czechs seeing little
feed-through but Romania facing a stagflation-type scenario with
growth near zero and inflation on the rise.
Czech consumer prices rose by a lower-than-expected 0.1
percent in March from February, and the annual inflation rate
was 1.7 percent, below the central bank's 1.9 percent forecast
and the market's 1.8 percent prognosis.
Romanian inflation quickened to 8 percent in March. With
food, fuels and energy making up more than 50 percent of the
country's inflation basket, the poor Balkan state is more
exposed to commodity shocks than its more developed EU peers
where that number is 30 percent or less.
Price growth in Romania has eclipsed the central bank's 2-4
percent inflation target and dashed forecasts from earlier in
the year that rate setters could lower the 6.25 percent base
rate to help to spark growth in a moribund economy.
"The figures are lowering chances for a rate cut this year,"
said Melania Hancila, chief economist at Volksbank. "The economy
is still facing aggregate demand deficit and consumption can be
stimulated only through monetary policy relaxation."
Most analysts now expect Romania's central bank to keep
rates on hold until the end of the year. <RO/POLL1><RO/POLL2>
The Czech crown <EURCZK=> and Romanian leu <EURRON=> both
edged up slightly after Monday's data. []
CZECH RISE POSSIBLE BY MID YEAR
Czech inflation -- which along with the country's interest
rates has been below euro zone levels for much of the past
decade -- fell from 1.8 percent a month earlier and remained
below the midpoint of the central bank's target of 2 percent
plus or minus one percentage point.
Despite double-digit growth in industry in the small
export-based economy, Czechs have yet to resume their pre-crisis
spending patterns, with the sales of retail items and homes, as
well as new loan applications, remaining subdued.
That may have picked up slightly in the first quarter, with
data last week showing a rise in car registrations and a
higher-than-forecast rise in retail sales, as well as an
unexpected fall in unemployment to 9.2 percent.
The Czech central bank said that the lower-than-expected
figure was mainly caused by food prices and it would not change
its forecast, which sees interest rates rising only at the
year-end.
Analysts said that, despite having their main rate half a
point lower than the ECB's at 0.75 percent, Czech rate setters
would probably not hike at their next meeting on May 5, although
a rise could happen before mid-year.
Central bank Governor Miroslav Singer suggested the ECB's
quarter-point increase in euro zone rates last week would not
affect the May decision.
"I do not believe that anyone on the bank's board was
surprised by the rate move from the ECB," Singer said. "It does
not significantly change risks in either direction."
Three members of the Czech central bank's seven-member board
have suggested they could vote for higher interest rates soon,
but last week Deputy Governor Mojmir Hampl said demand was
weaker than anticipated. Most analysts expect the bank to raise
interest rates by a quarter point at around mid-year.
(Editing by Stephen Nisbet)
