RPT-POLL-Czech c.bank seen holding rates at 5-yr high in Oct

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By Mirka Krufova and Martin Dokoupil

PRAGUE (Reuters) - The Czech central bank (CNB) will probably keep interest rates on hold for the second month running in October due to a firmer crown and fading expectations of rate increases abroad, a Reuters poll showed on Monday.

The survey of 16 analysts showed 11 looking for no change in the key two-week repo rate at the upcoming CNB policy meeting on Oct. 25. Five forecast a 25 basis point hike.

The CNB tightened policy screws three times this year, with the latest quarter-point move bringing the main rate to a five-year high of 3.25 percent in August, as household spending feeds inflation in an economy growing at 6 percent a year.

"Inflation is rising mainly due to administrative factors ... which cannot by influenced by monetary policy," said Petr Sklenar, chief economist at Atlantik, one of the 11 respondents who saw the CNB staying put this month.

"Besides this, the crown has firmed significantly ... and the ECB (European Central Bank) has probably completed the current cycle of raising interest rates," added Sklenar.

The crown is the key factor moderating the CNB's tightening drive. Since July, it has regained ground lost in the first half due to an unwinding of carry trades, which used the low-yielding Czech unit to fund positions in high-yield assets.

The crown has been trading 2 percent above the level of around 28.1 per euro which the market believes the CNB took as its short-term outlook to draw up the most recent inflation projections in July.

The currency traded around 27.5 per euro on Monday, slightly weaker from an all-time high of 27.385 seen in mid-September. The CNB will publish a quarterly update to its inflation forecast after the rate decision on Oct. 25.

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A separate Reuters poll showed last month the euro zone benchmark interest rate has probably peaked at 4.0 percent as volatile financial markets dented economic growth [ECB/INT].

Of the 11 analysts expecting no Czech rate change this month, seven forecast a 25 basis points hike in November. The median forecast for the main rate 12 months from now was 3.75 percent, suggesting two 25 basis point hikes over that period.

"The stronger crown will go some way to dampening inflationary pressures, but there is no doubt in our minds that rates have further to rise," said Lauren Van Biljon, analyst at 4Cast, who expects a quarter-point hike in November or December.

Three of the seven CNB board members have signalled in the past few days the bank remains in a tightening mood, aiming to contain inflation, and that it was debating when and by how much rates should rise further.

Annual inflation quickened to a 13-month high of 2.8 percent in September, and analysts expect prices to jump in the coming months due to base effects, planned tax hikes and deregulations.

CNB Governor Zdenek Tuma said on Monday the tight labour market could become another source of inflationary pressures. The CNB board is due to meet union representatives on Tuesday to discuss the outlook for wage rises.

TABLE with analysts' rate forecasts.............[ID:nL15313264] FACTBOX on recent statements of CNB policymakers[ID:nL15379905] FACTBOX on profiles of CNB policymakers.........[ID:nL25747004]