INSTANT VIEW 2-Slovak Feb CPI matches mkt forecasts

...percent, the Statistics Office said on 
Tuesday. 
KEY POINTS: 
SLOVAK HEADLINE CPI      FEB 07    FEB 07 FCASTS 
  pct change mo/mo        +0.2        +0.3 
  pct change yr/yr        +2.7        +2.7 
     
(for full table pls click ............ [ID:nPRG000263]) 
     
- Analysts surveyed by Reuters had expected consumer prices to 
have risen by 0.3 percent on the month, for an annual rate of 
2.7 percent in February. 
- The core inflation rate, which excludes the impact of changes 
to state-regulated prices and excise taxes, was forecast at 0.3 
percent month-on-month and at 2.5 percent on an annual basis. 
- Housing, water, electricity, gas and other fuels, which is the 
item with the the strongest weighting in the consumer basket, 
rises by 0.8 percent in February, after 1.8 percent growth in 
the previous month. 
- Prices of food and non-alcoholic beverages rise 0.3 percent on 
the month in February after a 1.6 percent rise in January. 
- Transportation prices, influenced mainly by oil costs, fall by 
0.7 percent on the month in February, after a 0.5 percent drop 
in January. 
     
ANALYST COMMENTS: 
    JURAJ VALACHY, ANALYST, TATRA BANKA, BRATISLAVA 
    "The figures are better than I had expected. All items were 
developing quite favourably. There was a slowdown in growth 
dynamics of food prices compared with the previous month. 
    "These figures are favourable for meeting the Maastricht 
criterion. We expect the central bank could cut interest rates 
by 25 basis points already in the second quarter and these 
inflation figures are supporting this view." 
     
    EDUARD HAGARA, ANALYST, ING BANK, BRATISLAVA 
    "It is lower than we had expected. The inflation outlook is 
favourable now, but caution is needed as risks stemming from 
external factors persist. 
    "If the crown remains at stronger levels below 34.0 per 
euro, it would increase the risk for an earlier rate cut 
motivated by the strong currency." 
 
MARKET REACTION: 
- The crown weakened after the data to 34.150 per euro from 
34.085 before the release . It traded at 34.115 as of 
0815 GMT, compared with Monday's close of 34.025. 
 
BACKGROUND: 
- Inflation data were calculated according to domestic 
methodology. 
- The central bank follows inflation calculated under the 
EU-harmonised consumer price index more closely, but the market 
watches the local figures because of their earlier release. 
- The Statistics Office will release EU-norm inflation data for 
February on March 15. 
- The central bank sets its inflation targets according to 
EU-norm data as part of Slovakia's preparation for joining the 
euro in 2009. 
- Slovak inflation accelerated in 2005 and 2006 due to hikes in 
natural gas and heating prices for households. 
- The central bank raised the key two-week repo rate by 175 
basis points last year to fend off inflation risks stemming from 
high energy prices and fast economic growth. 
- Analysts said the central bank could cut rates sometime in 
2007 if inflation trend shows that Slovakia is on track to meet 
the consumer price growth condition for euro adoption. 
   
LINKS: 
- For further details on February inflation and other past data, 
Reuters 3000 Xtra users can click on the Slovak Statistics 
Office's website: 
    http://wwww.statistics.sk/webdata/english/index2_a.htm 
 
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