INSTANT VIEW 3-Slovak March CPI slightly below forecasts

...Slovak Statistics Office said on Thursday. 
 
KEY POINTS: 
SLOVAK HEADLINE CPI      MARCH 07    MARCH 07 FCASTS 
  pct change mo/mo         0.0         +0.2 
  pct change yr/yr        +2.7         +2.8 
     
(for full table pls click ............ [ID:nPRG000306]) 
     
- Analysts surveyed by Reuters had expected consumer prices to 
have risen by 0.2 percent on the month, for an annual rate of 
2.8 percent in March. 
- The core inflation rate, which excludes the impact of changes 
to state-regulated prices and excise taxes, was forecast at 0.2 
percent month-on-month and at 2.7 percent on an annual basis. 
- Housing, water, electricity, gas and other fuels are flat in 
March, after 0.8 percent growth in the previous month. 
- Prices of food and non-alcoholic beverages are flat on the 
month in March after a 0.3 percent rise in February. 
- Transportation prices, influenced mainly by oil costs, rise by 
0.1 percent on the month in March, after a 0.7 percent drop in 
February. 
 
ANALYST COMMENT: 
    SILVIA CECHOVICOVA, ANALYST, CSOB BANK, BRATISLAVA 
    "The inflation trend is still very favourable, and the 
central bank appears to have room to lower interest rates in the 
coming months. We maintain our prediction of a rate cut in the 
second quarter by 25 basis points." 
     
    MARIA VALACHYOVA, SENIOR ANALYST, SLOVENSKA SPORITELNA, 
BRATISLAVA 
    "The data confirm the picture of a favourable inflation 
outlook. They also confirm that demand-led inflation pressures 
are not very strong, and the central bank will be able to react 
to strong crown by lowering interest rates. We expect a rate 
cut, by 25 basis points, in April." 
     
MARKET REACTION: 
    The crown showed no reaction to inflation data, trading flat 
at 33.380 to the euro  
    
BACKGROUND: 
- Inflation data were calculated according to domestic 
methodology. 
- The central bank sets its goals according to inflation 
calculated under the EU-harmonised consumer price index as part 
of Slovakia's goal to adopt the euro in 2009. 
- The Statistics Office will release EU-norm inflation data for 
March on April 16. 
- The market followed local inflation data in the past because 
of their earlier release, but analysts started to pay more 
attention to statistics by EU-methodology after the two figures 
began to show wider differences earlier in 2007. 
- Slovak inflation accelerated in 2005 and 2006 due to hikes in 
natural gas and heating prices for households. 
- But price growth slowed down at the start of 2007 as the 
effect of energy price hikes faded away. 
- The central bank cut its key two-week repo rate by 25 basis 
points to 4.50 percent in March after rising crown tightened 
monetay conditions and helped improve inflation outlook. 
     
LINKS: 
- For further details on March 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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