POLL-Slovak Oct inflation seen slowing to 1-yr low

    By Martin Santa 
    BRATISLAVA, Nov 3 (Reuters) - Slovak inflation probably fell 
to a one-year low in October on positive base effects, but the 
central bank (NBS) is still likely to lift interest rates this 
month to curb price pressures, a Reuters poll showed on Friday. 
    The NBS has tightened policy by 175 basis points this year 
to bring down inflation and keep Slovakia on its euro adoption 
track.  
    But the bank left its key rate at 4.75 percent earlier this 
week, wrong-footing the market, which though another hike was on 
the cards. 
    The survey of 10 analysts suggested the EU-norm annual 
inflation rate slowed to 3.3 percent in October, its lowest rate 
since Sept. 2005, from 4.5 percent in the previous month. 
    "It (the slowdown in inflation) will be due to base effects 
as gas and heating prices increased significantly last year," 
said Marek Gabris analyst at CSOB bank.  
    "Oil prices are falling worldwide ... and this is a reason 
for such a significant inflation slowdown." 
    On the month, prices were forecast to have grown by 0.1 
percent, after a 0.2 percent decline in September. Official data 
are due on Nov. 16. 
    Annual inflation peaked at 5.0 percent in July and August, 
fuelled mainly by higher prices of gas, electricity and heating. 
EU-norm inflation is a key gauge for the NBS, which aims to 
bring the EU-newcomer into the euro zone in 2009. 
    On Tuesday, the central bank revised upwards its inflation 
forecast for the end of 2006, but said softer inflation risks 
from oil prices and other cost factors allowed it to lower the 
end-2007 inflation prediction. 
    However, the updated inflation prediction of 2.6 percent for 
2007 remained above the NBS' target of 2.0 percent. 
    Seven out of 10 analysts surveyed forecast the central 
bankers will raise lending costs by 25 basis points, when they 
meet on Nov. 28, to keep Slovakia on a safe path to the euro 
adoption. 
    "Risks of secondary effects, spilling over from higher 
regulated prices on demand-pull inflation, still persist," said 
Slovenska Sporitelna analyst Maria Valachyova. 
    But some observers said the bank may take a break in its 
tightening cycle for the second month in a row in November to 
better assess the impact of a recent sharp firming of the crown 
currency against the euro and lower oil prices. 
    All analysts see the key two-week repo rate at 5.0 percent 
at end-2006. 
    The crown rose to a record high of 36.250 per euro last week 
<EURSKK=>. The unit has outperformed its regional peers this 
year, gaining 4 percent against the euro. 
  ((For a table with results of the Reuters macroeconomic poll 
for November, please click on [ID:nL03877386])) 
  ((Reporting by Martin Santa, Editing by Gerrard Raven; Reuters 
Messaging: martin.santa.reuters.com@reuters.net; Email: 
martin.santa@reuters.com; +421 2 5341 8402)) 
  
  Keywords: ECONOMY SLOVAKIA INFLATION POLL