INSTANT VIEW 3-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." 
     
    JURAJ VALACHY, ANALYST, TATRA BANKA, BRATISLAVA 
    "Inflation is still low...The outlook is very good and this 
opens room for a lowering of interest rates in the third 
quarter." 
     
    PIOTR MATYS, ANALYST, 4CASTWEB, LONDON 
    "The breakdown suggests that inflationary pressures from 
main components are contained and a further rate cut is on 
cards. Our baseline scenario is a cut by 25 basis points in Q3." 
     
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 
     
- For LIVE Slovak economic data releases, click on...... 
- Schedule of upcoming indicator releases............ 
- Summary of short-term economic data forecasts...... 
- Stories on Slovak currency moves........................[SKK/] 
- Slovak speed money guide ................................ 
- Slovak benchmark state bond prices ................. 
- Slovak forward money market rates ....................