UPDATE 1-Czech cbank official says rate hike may be delayed

(Writes through with market reaction, analyst quote)

By Marek Petrus

PRAGUE, Nov 10 (Reuters) - The Czech central bank (CNB) may raise interest rates later than envisaged by its October prediction after the crown appreciated to record levels this month, CNB Vice-Governor Miroslav Singer told Reuters.

Singer's remarks, the first from any CNB policymaker after the crown scaled an all-time high of 27.875 to the euro on Monday, reinforced market expectations that policy was likely to stay on hold through the year-end.

The CNB's forecast from last month assumed a further gradual rise in the 2.50 percent key rate after 75 basis points worth of hikes over the past year to prevent inflation from exceeding the 4 percent upper boundary of its rolling target next year.

But the crown's nearly 1 percent rally against the euro so far this month countered the central bank's expectations of exchange rate stability, leading investors to wipe out earlier bets on an additional rate hike in November or December.

"An interest rate increase may be delayed versus our projected trajectory," Singer told Reuters in a brief interview.

"There is the exchange rate (development), which I, however, do not want to overestimate. Also the (latest) data look relatively favourable," Singer said after speaking at a seminar on euro adoption late on Thursday.

"Obviously we have yet to weigh (all these factors) and analyse them," he added. The next interest-rate setting session is scheduled for Nov. 30.

'ONLY NEXT YEAR'

His comments sparked a 3-4 basis points fall on Friday in forward-looking short-term money market rates <CZKFRA>, reversing the previous session's mild rise driven by the crown's retreat to the weaker side of the 28 per euro level.

The currency slid to 28.210 per euro <EURCZK=> by 0925 GMT, off third of a percent on the day.

Data released earlier this week showed a sharper than expected fall in consumer price growth to a near 1-1/2-year low and an unexpected slowdown in manufacturing output, suggesting economic growth is slowing from its first-quarter peak.

October inflation eased to 1.3 percent, undershooting the CNB's forecast by 0.2-0.3 percentage points and falling through the bottom of its target, which is to keep price growth within one percentage point of a 3 percent mid-point.

"With inflation surprising well to the downside in October and the crown having hit historical highs, we continue to believe that the CNB is likely to resume its hiking cycle only next year," said Silja Sepping, economist at Lehman Brothers.

"Singer's comments today that rate hikes may be delayed only supported this view," she added.

A firming currency tends to keeps a lid on import prices in the small and very open Czech economy, helping offset budding pressure on prices from about 6 percent annual economic growth which has been increasingly propelled by consumer spending. ((Editing by Ruth Pitchford; Reuters Messaging: rm://marek.petrus.reuters.com@reuters.net; e-mail: prague.newsroom@reuters.com or marek.petrus@reuters.com; Tel: +420 224 190 477))

Keywords: ECONOMY CZECH RATES