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By Jan Lopatka
PRAGUE (Reuters) - The Czech central bank will take a break from raising interest rates at its June policy meeting next week, but a build-up in price pressures will bring another policy tightening in July, a Reuters poll showed on Friday.
Fourteen out of the 15 analysts in the survey said they expected the bank to hold rates at the June 28 meeting, while one leaned toward a 25 basis point hike.
Czech central bankers raised the two-week repo rate by a quarter of a percentage point to 2.75 percent last month, the highest level in four years, as inflation rises and the central European economy powers ahead at 6.1 percent thanks mainly to private consumption.
Another major factor in favour of tighter policy is the weakening Czech crown, a key contributor to price movements in the open economy. The crown has shed 4.2 percent versus the euro since the beginning of the year.
The crown has split from its regional peers and has been losing ground because it has become a funding currency for carry trades taking advantage of higher yields elsewhere.
The poll also showed the median forecast for the repo rate 12 months ahead shifted to 3.5 percent, from 3.25 percent in May.
"The crown has weakened further, both consumer and producer prices came above forecast, the same is the case of wage growth, and gross domestic product revealed a more pro-inflationary structure than what most people had expected," said Radomir Jac, chief analyst at PPF asset management.
"In other words, the majority of news points to further interest rate hikes. However, it is difficult to believe that Czech central bankers would increase interest rates at two board meetings in a row," he said.
The vote at the May meeting was the tightest possible, with three bankers in favour of a hike and three against, making Governor Zdenek Tuma's vote swing the balance.
Two members of the 7-seat policy-making panel -- Deputy Governor Miroslav Singer, seen as rather hawkish, and dovish member Robert Holman -- will miss the June 28 meeting, the central bank said.
Singer said last week another rate hike may come soon, while Holman said earlier in June he saw no big inflation risks.
Economists have said the bankers may prefer to wait until July with another rate tightening because they will by then receive a quarterly update to the bank's inflation forecast, the key driver indicating the rate path in relation to the bank's inflation target of 3 percent, +/- 1 percentage point.
Consumer prices grew by 2.4 percent on the year in May, but the bank's latest quarterly forecast from April sees the pace accelerating to 3.2-4.2 percent at the end of this year. Moreover, the May result was half a percentage point above the path forecast in April.
Interest rates in central European economies have been on different paths from their widely different nominal settings.
In Slovakia, the central bank is expected to hold rates flat this month at 4.25 percent as it awaits the European Central Bank to raise rates to the same level.
Hungary is expected to keep policy steady but cut from the 8.0 percent level next month, while Polish rates are seen steady at 4.25 percent. (For TABLE with analysts' responses, click on [ID:nL22263839])