POLL-Czech c.bank seen hiking in Sept after weak July CPI

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The Czech central bank (CNB) is likely to take a breather in policy tightening this month after July inflation came in below both its own and market forecasts, a majority of analysts polled by Reuters said on Wednesday.

Eight of the 13 central bank watchers in the survey expected a quarter-point interest rate rise in September, saying the soft July inflation figures allowed the CNB to wait to see whether price pressures pick up as much as the central bank forecast.

Four analysts disagreed, arguing policymakers would be sufficiently worried about the projected revival in price growth to make them approve a 25 basis point rise in the main repo rate at the Aug. 30 meeting.

One analyst did not foresee a rate rise until sometime in the fourth quarter.

The annual inflation rate slowed to 2.3 percent from 2.5 percent in June, wrong-footing analysts' 2.6 percent consensus forecast [POLL/CZ].

The CNB had expected 2.5-2.6 percent inflation in July in a quarterly projection published following a 25 basis point hike in its policy rate to 3 percent on July 26,, the second such move this year [ID:nL26800751].

Policymakers have signalled even tighter policy would be required to keep price growth within the tolerance band of 1 percentage point either side of the CNB's 3 percent target over the medium term.

"The message of the July quarterly projection raised the prospect of another hike in August. The July inflation release will work as a cushion, delaying a hike for at least a month," said Radomir Jac, chief analyst at PPF Asset Management.

Apart from him, analysts at CSOB, JP Morgan, Next Finance, UniCredit, Goldman Sachs, Citigroup and Patria Finance said another hike would come in September.

Ceska Sporitelna, Komercni Banka, Raiffeisenbank and Atlantik FT expected an August rate increase despite the downside inflation surprise.

ING expected a hike in the fourth quarter.

REPORT ON JULY CPI RELEASE...................[ID:nL08145120]

INSTANT VIEW OF CPI DATA.....................[ID:nL08620278]

Keywords: CZECH ECONOMY/RATES

[PRAGUE/Reuters/Finance.cz]