POLL-Slovak rates seen unchanged as euro entry test to be met

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* WHEN: Tuesday December 18, 1015-1200 GMT

* Two week repo rate seen unchanged at 4.25 percent.

By Martin Santa

The Slovak central bank is likely to leave interest rates on hold next week as the country remains on track to meet next May's test of its readiness for euro entry despite a recent rise in inflation, a Reuters poll showed on Wednesday.

Thirteen analysts polled by Reuters unanimously forecast the bank (NBS) to keep the key two-week repo rate at 4.25 percent for the eighth consecutive month on December 18 as a firmer crown currency is helping to keep price growth under control.

"It's almost 100 percent certain that the country will meet the Maastricht inflation criteria in the spring," said Miroslav Plojhar, economist at JP Morgan in London.

"We expect the bank to stay in wait-for-the-euro mood and keep its base rate unchanged till mid 2008," he said.

EU Commission forecasts last month showed Slovakia should meet euro entry criteria on inflation and budget deficits in May when the it will judge whether the country is fit to adopt the single currency in 2009.

Under Maastricht treaty rules a euro candidate's average annual inflation over 12 months must be no higher than 1.5 percentage points above that of the three best performers in the EU. As euro zone inflation has risen the inflation benchmark now stands at 4.0 percent.

The NBS last changed policy in April with a 25 basis-point cut and is widely expected to wait for the European Central Bank's (ECB) move before taking action.

Slovakia met the inflation criterion for the first time in August, helped by record low EU-norm inflation of 1.2 percent. But rising food costs have pushed inflation to a 10-month high of 2.4 percent in October.

Data on Tuesday showed food price growth slowed substantially in November, helping headline inflation ease to 3.1 percent. November EU-norm inflation data is due on December 14.

Demand-led pressures remain benign despite record 9.4 percent growth in the third quarter, though some analysts warn of emerging inflation risks.

"Accelerating prices of market services could indicate signs of a build up of inflationary pressures and therefore we think the central bank should remain cautious," said Eduard Hagara, analyst at ING Bank in Bratislava.

The crown has firmed over 4 percent against the euro since January, standing at 33.144 as of 1030 GMT. It hit a record high of 32.710 in March.

(For accompanying table double click on [nL1271721])

(Writing by Martin Dokoupil and Martin Santa)

Keywords: SLOVAKIA CBANK/RATES

[BRATISLAVA/Reuters/Finance.cz]