UPDATE 1-Czech cbank holds rates for 6th month running

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By Marek Petrus

PRAGUE, March 29 (Reuters) - The Czech central bank (CNB) kept interest rates on hold for the sixth month running on Thursday, matching market expectations that benign price pressures warranted a further delay in policy tightening.

The CNB's main two-week repo rate was held at 2.50 percent , following 75 basis points worth of hikes between October 2005 and September 2006 to prevent robust economic growth from sparking an inflation revival.

All 18 analysts polled by Reuters last week had expected the policy rate to stay at the lowest level in the European Union and a record 125 basis points below the euro zone equivalent.

The CNB made no comment on the monthly meeting, which one of the seven policymakers -- rather dovish board member Robert Holman -- did not attend.

The central bank will release the count of votes for and against the rate decision and discuss its assessment of the balance of risks to inflation projections for up to 18 months at a news conference scheduled for 3:30 p.m. (1430 GMT).

Inflation has been stuck below the CNB's tolerance range of one percentage point either side of a 3 percent goal since October 2006, reflecting a past firming in the crown which has kept a lid on price pressures in the small and open economy.

The tame price growth and a stable crown currency have led investors to bet that an interest rate hike is almost completely out of the picture for the first half of 2007. The market expects a quarter point hike in July at the earliest.

The crown held flat at 28.05 against the euro after the CNB's rate announcement, about 2 percent weaker from life-time peaks reached late last year and early this year.

"Despite the weaker exchange rate, inflation developments have been far better than expected. So on balance, unchanged rates seemed a likely outcome," said Silja Sepping, central European economist at Lehman Brothers.

"The underlying inflation trend is very benign still and CPI should only rise closer to the CNB's target in the last quarter," she added, sticking to her forecast of one quarter-point rate hike in the second half of this year.

The consumer price index (CPI) probably went up 1.9 percent year-on-year in March, according to a Reuters poll of analysts released on Thursday, extending a gradual up-tick from 1.5 percent in February and a 1-1/2-year trough of 1.3 percent in January.

CNB Governor Zdenek Tuma appeared upbeat on the economy in a morning television talk show on Thursday, saying growth was likely to slow but sustain a robust pace of growth this year, with inflation staying low. For details, see [ID:nL29298878]

In its quarterly forecast unveiled in January, the CNB saw economic growth easing to an annual rate of about 5.3 percent after record expansion of 6.1 percent in both 2005 and 2006. It forecast inflation to pick up to about 3 percent by end-2007.

- REUTERS POLL ON DATA DUE OUT IN APRIL: [ID:nL2940601]

- OVERVIEW OF NEAR-TERM ECONOMIC FORECASTS: [ID:nL29735550]

- SUMMARY OF COMMENTS BY CNB POLICYMAKERS: [ID:nL28280579]

- LATEST INTEREST-RATE FORECASTS: [ID:nL21449308]

- FACTBOX ON C.EUROPEAN RATE DECISIONS: [ID:nL23653755]