INSTANT VIEW 2-Slovak March EU-norm CPI in line with fcast

...annual inflation rate at 2.1 percent, 
data from the Statistics Office showed on Monday. 
     
KEY POINTS: 
SLOVAK EU-NORM INFLATION    MARCH 07   MARKET FORECAST 
  pct change mo/mo            0.1         0.1 
  pct change yr/yr            2.1         2.1 
   
  (Details of Feb inflation data ............. [ID:nPRG000310]) 
 
- Food and non-alcoholic beverages, which have a strong 
weighting in the consumer price basket, fall by 0.1 percent 
month-on-month, after a 0.5 percent rise in February. 
- Housing, water, electricity, gas and other fuels, which 
pushed inflation up last year, rise by 0.1 percent on the month 
in March, compared with a 0.2 percent rise in February. 
- Annual price growth in the housing category, which has the 
strongest weighting in the basket, is 2.6 percent, after 2.7 
percent rise in February. 
- Transportation prices rise by 0.3 percent month-on-month, 
after a 0.5 percent drop in February. 
     
ANALYST COMMENT: 
    EDUARD HAGARA, ANALYST, ING BANK, BRATISLAVA 
    "March EU-norm inflation was in-line with market 
expectations. 
    "The positive inflation outlook creates room for a lowering 
of interest rates, and the central bank might also see room (for 
lower rates) due to the crown." 
     
MARKET REACTION: 
    The crown showed no reaction to inflation data, trading at 
33.360 per euro , compared with 33.500 late on Friday. 
     
BACKGROUND: 
- The central bank follows inflation calculated by the 
EU methodology as a part of Slovakia's plan to adopt the euro in 
2009. 
- Prices under the local methodology were flat on the month in 
March, putting the annual rate at 2.7 percent. 
- Slovakia wants to meet all criteria for euro adoption in 2008. 
The central bank predicts EU-norm inflation rate to fall to 1.5 
percent at the end of 2007. 
- 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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