(Repeats story published on Oct 30)
* Rates flat at record low, Nov vote a tough call
* Recent crown retreat supports case for hold
* For table please double click on []
By Mirka Krufova and Jana Mlcochova
PRAGUE (Reuters) - Czech interest rates will likely stay
unchanged next week although there is some risk the central bank
will make one last stab at bolstering an economy that is still
picking up slowly, a Reuters poll showed on Friday.
Governor Zdenek Tuma and his deputy Miroslav Singer shocked
markets in minutes showing the pair had supported a quarter
point rate cut -- vetoed by the rest of the board -- at the
September meeting, with Tuma concerned at the strength of the
crown currency.
But there have been more signs growth is picking up since
then and the crown has lost around 4 percent to hit a four-month
low against the euro this week, hopefully cooling the governor's
concerns it could unbalance the economy.
Economists said the vote on Nov. 5 would still be a close
call as deflation risks remained strong and rising joblessness,
a government austerity package, and an unclear picture of the
euro zone recovery were expected to press downward on demand.
The poll showed 13 out of 20 analysts forecast the bank to
leave the main 2-week repo rate <CZCBIR=ECI> <CZRP=> used to
drain excess liquidity at a record low of 1.25 percent when it
meets on rates on Nov. 5. Seven forecast a cut.
"It is a very close call between on hold and a 25 basis
point cut," said Piotr Matys, an analyst at 4Cast.
"We expect the central bank to opt for stable rates," he
said, adding that risks to the bank's inflation outlook were
"well balanced".
MAIN CONCERNS
Analysts agree the worst is over for the central European
nation of 10.5 million, but the pace of recovery is unclear.
A chief concern at the central bank is just how much
inflation will undershoot its target next year of 2 percent plus
or minus one percentage point.
It should release the main highlights of its new quarterly
macroeconomic forecast after next week's meeting.
Downward pressures on inflation include a $4 billion
government austerity package set to kick in January and rising
unemployment that is not expected to peak until next year.
The crown <EURCZK=> followed its regional peers to a
10-month high in September -- a headache for exporters who are
the heart of Czech business -- before easing in the last week on
Tuma's comments.
It traded at 26.470 per euro at 1310 GMT, close to the
bank's forecast for the 2009 average rate of 26.6.
The central bank models assume a one percentage point change
in the exchange rate corresponds to a 0.2-0.25 percentage point
change in the bank's inflation outlook.
Most analysts said the crown's level now indicated rates
could stay on hold.
"The correction in the crown has mitigated the likelihood of
undershooting the bank's inflation target, and thus the
likelihood of another cut in interest rates is decreasing," said
David Marek, an analyst at Patria Finance.
Both Tuma and Singer have since spoken in favour of more
easing including using non-standard tools.
But board member Robert Holman said did not think the bank
would use such methods and that it should keep rates flat,
because pushing them lower could cause crown volatility and
would have limited impact on market rates.
(Writing by Jana Mlcochova; editing by Patrick Graham)
