UPDATE 1-Slovak c.banker says gas price cut helps curb inflation

(Adds quotes, background)

MODRA, Slovakia, Nov 30 (Reuters) - A reduction in household natural gas prices will cut inflation and raises the chances Slovakia will meet the criterion for adopting the euro currency, central bank board Peter Sevcovic said on Thursday.

Natural gas supplier Slovensky Plynarensky Priemysel announced an average 4 percent reduction in prices for households for the next year.

Slovakia is trying to curb inflation to qualify for entry into the euro zone in 2009. The key horizon is spring 2008 when assessment of its euro readiness is due.

"This means that inflation will be below the current forecast. It increases the probability of meeting the Maastricht criterion," he said at a meeting with employers.

The central bank expects average annual inflation of 2.5 percent in spring 2008, which would be below its 2.8 percent forecast of the reference rate for euro membership assessment.

The inflation rate, calculated by European Union standards, fell to a 12-month low of 3.1 percent in October, from 4.5 percent in September.

Sevcovic added he could not rule out either more interest rate hikes nor that the cost of money has already peaked.

"A lot will depend on the increase in regulated (utility) prices in January," he said. "A lot will depend on structure of GDP growth and on growth in wages and productivity."

The central bank has raised the key rate by 175 basis points in four steps this year to fight inflation risks that could endanger the planned euro adoption in 2009.

The NBS, however, kept the two-week repo rate on hold at 4.75 percent, a 150 basis point premium over the euro zone benchmark rate, at the November policy meeting on Tuesday as firming crown in the past month dampened inflation risks.

The Slovak economy rose by record 9.8 percent in the third quarter, but the bank said the acceleration appeared to have been driven mainly by non-inflationary foreign demand. ((Reporting by Peter Laca, writing by Jan Lopatka, editing by Ron Askew; Reuters Messaging: peter.laca.reuters.com@reuters.net; +40 21 315 8320))

Keywords: SLOVAKIA CBANKER/