* Slovak interest rates decision, June 24
* Key 2-week repo rate seen flat at 4.25 percent
* Majority sees rates flat throughout the year, ECB in focus
By Martin Santa
BRATISLAVA, June 20 (Reuters) - Slovakia's central bank will
keep interest rates flat for the 14th consecutive month in June,
which should bring it in line with the European Central Bank
(ECB) if it hikes next month as expected, a Reuters poll showed.
All 13 analysts in the Reuters poll said the National Bank
of Slovakia (NBS) would hold the two-week repo rate at 4.25
percent at the monthly policy meeting on June 24, maintaining a
25 basis point premium over the euro zone benchmark for now.
Ten analysts saw no Slovak move this year, while two
predicted a 25 basis point rate hike and one expected a 50 basis
point cut. All said the bank would track the ECB's course.
Slovakia will have to level its rates with the euro zone
after European Union leaders gave a green light to let the
country become the 16th member of the currency bloc next year.
However, signs of demand-led pressures in the fast growing
economy make monetary policy easing in Slovakia unlikely in the
short term, while analysts said the ECB would probably tighten
this summer due to inflation worries, which would bring the
Slovaks level.
"We do not expect the NBS to increase interest rates despite
the current inflationary pressures, as monetary policy is, in
our view, still restrictive owing to the strong crown," said
Citibank analyst Jaromir Sindel.
"Moreover, we expect the NBS to continue to follow the ECB's
interest rate-setting policy with a lag. We expect the impact of
the stronger koruna to become more apparent later this year."
Slovakia has been facing upward pressure on prices in the
past nine months, stemming mainly from the global rise in food
and energy costs. The central bank says the main inflationary
factors are outside the influence of its monetary policy.
Inflation, measured by EU methodology, reached a 20-month
high of 4.0 percent in May, and analysts expected it to peak at
around 4.4 percent in the summer.
Efforts to keep inflation in check have been helped by the
crown's appreciation in recent months ahead of the announcement
of the switchover rate for euro adoption.
The Slovaks revalued the central parity within the euro zone
waiting room, the ERM-2 exchange rate mechanism, by 15 percent
to 30.1260 per euro <EURSKK=> on May 28, following rapid
appreciation in the crown, and this is widely seen as the final
conversion rate.
For accompanying table, please see []
(Reporting by Martin Santa; Editing by Victoria Main)
