POLL-Slovak rates seen flat in Jan after crown jump

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WHEN: Release date: Jan. 17, 0800 GMT; central bank's monetary meeting on January 30.

* Inflation seen steady, rates on hold.

By Martin Santa

The Slovak central bank (NBS) will probably leave its key interest rate unchanged in January because the strong crown has helped to tame inflation risks, analysts said on Tuesday.

All 10 analysts in a Reuters poll predicted the two-week repo rate would stay at 4.75 percent at the end of January for the fourth consecutive month, maintaining a 125 basis point premium over the main euro zone borrowing rate.

"The rate decision will be mainly influenced by the crown, which is now much stronger than the central bank wishes for," said Danske Bank analyst Stanislava Pravdova. "Inflation is still high, but the view on the crown will prevail."

The Slovak unit has firmed by some 8.8 percent since the end of September, when the NBS delivered the last of four 2006 rate hikes totalling 175 basis points.

Last year's rate hikes were meant to fend off inflation risks stemming from fast economic growth -- Slovakia's real GDP rose by a record 9.8 percent in the third quarter -- and the uncertain outlook for energy prices.

But the firming currency has tamed consumer price growth, allowing the NBS to hold rates flat over the past three months and still stay on track to adopt the euro in 2009.

The Reuters survey forecast inflation using the EU measure at an annual 3.7 percent in December, matching November's rate.

The NBS predicts inflation to fall to 2.6 percent at end-2007, which would be still above its 2.0 percent target.

But it expects average price growth forecast at 2.5 percent in spring 2008, when Slovakia will be assessed for euro membership, will be low enough to qualify.

"We don't see rate cuts as likely at the moment," said Slovenska Sporitelna analyst Maria Valachyova. "The central bank has to be sure it will meet the Maastricht inflation criterion and make sure the inflation outlook for 2008 is seen as stable."

((For a full table of the poll results, please double click on [ID:nL09911399])) ((Writing by Martin Santa and Peter Laca; editing by Ruth Pitchford; tel. +421 2 5341 8402, email: peter.laca@reuters.com; RM: peter.laca.reuters.com@reuters.net;))

Keywords: SLOVAKIA ECONOMY/

[BRATISLAVA/Reuters/Finance.cz]