* Romanian June inflation hits 8.6 percent in June
* Slovak inflation matches 20-month high of 4.6
* Czech industrial production slows more than expected to
3.4 percent in May.
By Jason Hovet
PRAGUE, July 10 (Reuters) - Central and eastern European
price growth neared expected peak levels in June, although
record high currencies have eased pressure on central banks to
hike interest rates at a time of a quickening economic slowdown.
Romanian prices rose an annual 8.6 percent in June from
May's 8.5 percent, while Slovak inflation matched May's 20-month
high of 4.6 percent, data showed on Thursday.
Czech annual inflation eased to 6.7 percent in June from 6.8
percent the previous month, data earlier this week showed, but
the central bank says it can jump above 7 percent by autumn.
Persistent high inflation has complicated most policymakers'
next moves as they are under pressure to hike interest rates but
are watching their economies slow due to falling demand from
euro zone trade partners and record high currencies.
Separate data on Thursday showed Czech industrial production
growth slowed more than expected to 3.4 percent in May, and
Slovakia's automotive-heavy manufacturing sector grew less than
forecast, mirroring trends in western Europe where May output
broadly fell.
"It is a tough balancing act for central banks now to manage
a peak in inflation and not hurt the economy," said Lucy
Bethell, a currency strategist at Royal Bank of Scotland.
RIGHT MOVES
Central banks in the Czech Republic and Poland have put in
place a series of rate hikes in the past year to tackle rising
global food and fuel prices feeding into local price rises.
Hungary and Romania have also steeply raised interest rates
this year, while Slovakia has kept the cost of borrowing flat as
it prepares for adopting the euro currency on Jan. 1.
Currencies like the Polish zloty <EURPLN=>, Czech crown
<EURCZK=> and Hungarian forint <EURHUF=>, which have all
appreciated about 10 percent this year, hovered near record
highs on Thuirsday.
They have lent central banks support in combating price
growth, but policy makers in the Czech Republic and Poland have
signalled the crown and zloty could dent growth, opening the
door to a pause in rate hikes, or even a shift in bias.
Analysts' forecasts point to inflation in the region peaking
above today's levels in the coming months but then staying
elevated into next year.
Inflation in Hungary is expected to slow to 6.9 percent from
7.0 percent when June figures are released Friday, while Polish
prices are expected to rise 4.5 percent, compared with 4.4
percent in May before peaking in the summer.
Analysts said inflation in Romania is likely to peak in
July, while Slovak price growth is seen at a high by August.
Romania's peak will likely prompt its central bank to hold
off on further rate rises, said Rozalia Pal, head of
macroeconomic research at UniCredit Tiriac Bank in Bucharest.
"But I don't see cuts by the end of this year, as there are
still pressures from the demand side," she said.
Romania's main rate stands at 10 percent, the highest in the
region, while Czech rates are the lowest at 3.75 percent.
Analysts tip the Czechs as the first loosen.
