* Rate decisions in Hungary, Slovakia, Poland and Serbia
* Hungary Aug 25, Slovakia Aug 26, Poland Aug 27, Serbia Aug
28
* Markets expect steady rates in all four countries
* Latest rate polls: Poland [], Czech
[], Hungary [], Slovakia []
By Gergely Szakacs
BUDAPEST, Aug 22 (Reuters) - Interest rates across central
Europe are expected to remain on hold next week as policymakers
step back to gauge the impact of strong currencies and easing
commodity prices on long-term inflation and growth.
Central banks in Hungary, Slovakia, Poland and Serbia meet
next week to discuss policy against the backdrop of near-record
levels in their respective currencies, which help shield them
from higher prices of imported goods, chiefly food and energy.
But with a slowdown in the euro zone economy also showing up
in domestic data, the Czech central bank surprised markets this
month when it delivered on warnings to cut interest rates due to
concerns that currency gains may stifle growth.
Poland's zloty <EURPLN=D2>, Hungary's forint <EURHUF=D2> and
the Czech crown <EURCZK=D2> all scaled record highs last month,
boosted by high interest rates and a better assessment of their
economic grounding than riskier emerging market assets.
In Poland, the region's biggest economy, the central bank is
expected to hold fire when it meets next Wednesday, with poorer
than expected data and signals from policymakers encouraging
some analysts to predict interest rates have peaked.
Last month it left rates on hold at 6 percent after hikes
totalling 200 basis points since April 2007.
"We read yesterday's MPC minutes as a clear shift in focus
from a hawkish bias to a more neutral one," JPMorgan's Nora
Szentivanyi said in a note.
"The impact of zloty strength on economic growth took centre
stage in the MPC's deliberations last month, with considerable
less space devoted to inflation expectations and wage dynamics,"
she said.
After downside surprises in industrial output and producer
price growth data this week, JPMorgan now expects Polish rates
to fall by 75 basis points to 5.25 percent by the end of next
year, a quarter point below its previous forecast.
RATE CUTS EYED
In Hungary, all 19 economists polled by Reuters predicted
the central bank would leave interest rates unchanged at 8.5
percent next Monday <HUREPO1>, the third month in a row, after
hiking rates by a combined 100 basis points earlier this year.
While inflation remained high at an annual 6.7 percent in
July, wage growth was running largely in line with expectations,
and analysts say a rate hike in Hungary is now off the table,
with bets shifting towards the timing of the first cut.
"Based on the remaining upside risks to the medium-term
inflation outlook ... the MPC will keep monetary conditions
tight in the coming months in an effort to control inflation
expectations," Citigroup said in a note.
"We do not expect easing before early 2009, before private
sector wages and core CPI components demonstrate that inflation
expectations have moderated," it said.
In Slovakia, headed for euro entry next year, all nine
analysts in a Reuters survey expected interest rates to remain
on hold at 4.25 percent despite inflation rising to 4.4 percent
last month and possibly ticking even higher in August.
Slovakia has seen rising inflation in the past year driven
mainly by the global rise in food and energy costs. But analysts
said sharp gains in the crown currency from the first half of
the year would likely limit price growth going forward.
In Serbia, the central bank is seen holding borrowing costs
steady at 15.75 percent, after it kept rates on hold last month
amid hopes that a drop in oil prices and better-than-forecast
grain harvest would help bring inflation down.
It last raised its two-week repo rate <RS2WTS=NBYA> by 50
basis points in May.
"We believe the recent EMEA rate decisions indicate that a
more fundamental change might have taken place inside central
banks: namely a shift from inflation to growth as the dominant
concern," UBS said in a note.
(Reporting by Gergely Szakacs; editing by Patrick Graham)
