* Rates seen on hold around the region in Sept
* Rate cycle likely peaked, but some may wait with cuts
* Czechs seen cutting again in Q4, Hungary may follow
* Polish rate poll []
Czech rate poll []
Romanian rate poll []
By Jan Lopatka
PRAGUE, Sept 19 (Reuters) - Central European policy makers
will likely leave interest rates flat when they meet over the
next two weeks, but worries over the impact of the global credit
crisis are softening the outlook for the coming months.
Inflation is still above targets across the region's former
communist states, but an expected cooling of their generally
fast-growing economies, along with a drop in commodity prices,
has eased worries on price growth.
The global credit crunch is also already squeezing lending
to Polish, Czech and Romanian companies and consumers, putting a
strain on growth, analysts say.
"The weakness in central Europe... will rather grow than go
away. For most central banks this means a lowering of interest
rates is on the way," said Miroslav Plojhar, an economist at JP
Morgan.
Analysts have scaled back forecasts for Polish hikes, and a
drop in industrial output in August prompted further doubt on
the need to tighten policy as growth of domestic demand eases,
adding to a drop in foreign demand for central European exports.
The Polish central bank is expected to leave the key rate at
6.0 percent on Sept. 24, the first in a series of policy
meetings over the next two weeks.
A Reuters poll of analysts released on Sept. 8 predicted
flat rates this month but one more hike this year, in October.
One possible reason to tighten policy further is Poland's
plan to speed up euro adoption, which requires squashing
inflation, some analysts said.
CZECHS ON DOWNWARD PATH
The Czech central bank was the first to turn the cycle with
a 25 basis point cut to 3.50 percent last month, inspired by the
deteriorating growth outlook and record-strong crown currency.
It will likely hold rates steady on Sept. 25, a Reuters poll
showed on Friday, but cut once more before the end of the year,
most likely in November.
"We have an outlook for falling inflation and cooling
economic growth both in the Czech Republic and the euro zone but
we share the opinion that due to all global uncertainties the
option of staying on hold will win," said Radomir Jac, chief
economist at Generali PPF Asset Management.
"At the same time we believe that the (bank's) new
macroeconomic forecast, due in November, will be supportive for
an interest rate cut at that time."
The Czech economy, extremely open to trade and thus
dependent on foreign demand, has begun to cool from a more than
6-percent clip in the past three years, and the central bank
sees expansion of just 3.6 percent next year.
HUNGARY WAITS
Interest rates in the region's slowest growing economy,
Hungary, are also expected to stay on hold at 8.5 percent this
month, due to remaining price risks and the global financial
turmoil which has also weakened the forint.
"Macro indicators were encouraging, the recent fall of world
oil and commodity prices brighten the inflation outlook, but as
the central bank made clear many times, they need more
evidence," said Mariann Trippon, analyst at CIB Bank.
"We still think that the NBH's next move will be a cut, in
late 2008 or early 2009."
Central bank Governor Andras Simor said on Friday the bank
would cut when it sees that risks have fallen [].
Romanian policymakers, due to meet on Sept. 25, have hiked
aggressively but the market believes rates have peaked there as
well, at 10.25 percent, and a Reuters poll showed a cut would
come in February.
But JP Morgan's Plojhar said that owing to exposure to
foreign credit, Romania may still be forced to hike policy to
protect the currency in case of a capital outflow.
Serbia's central bank will meet on Oct. 1. It kept the main
rate at 15.75 percent at the last meeting on Tuesday, and has
said fiscal expansion was keeping rates high.
(Additional reporting by Krisztina Than in Hungary and
Karolina Slowikowska in Warsaw; editing by Patrick Graham)
