UPDATE 1-Czech cbank holds rates flat for 5th month running

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PRAGUE, March 1 (Reuters) - Czech central bank (CNB) policymakers held interest rates steady for the fifth month running on Thursday, matching market expectations that benign price pressures require no urgent policy tightening.

The key two-week repo rate was held at 2.50 percent, the lowest level in the European Union, following 75 basis points worth of tightening between October 2005 and September 2006 to prevent robust growth from sparking a revival of inflation.

The crown held broadly steady on the day at 28.222 per euro after the announcement. It has shed 3 percent since hitting lifetime highs in late December and early January, which analysts have said helped loosen credit conditions somewhat.

A news conference scheduled for 3:30 p.m. (1430 GMT) will be watched closely by markets for clues about whether the central bank could keep credit costs on hold in the near-term.

"The CNB should not hasten to raise rates," said Petr Dufek, analyst at CSOB bank in Prague.

"We predict that room for a rate hike may occur no sooner than the early second half of the year. Inflation will remain below the CNB's target for most of the year, and will probably exceed the target as late as the end of the year," he added.

In January, the rise in consumer prices slid further below the CNB's tolerance range of one percentage point either side of a 3 percent inflation goal.

Annual inflation dropped to 1.3 percent last month, matching a near 1-1/2-year trough reached in October 2006 and leading investors to take risks of an interest rate hike almost completely out of the picture for the first half of 2007.

But a rebound in household spending, a consumer credit boom and the prospect of sustained economic growth at around the 5 percent trend rate have all led investors to stick to the outlook for a gradual, albeit moderate, tightening later on.