* Rates stay at record low for third month
* C.bank governor says another rate cut possible
* Analysts still expect hike in second half of 2010
* Crown holds firm in face of dovish talk
(Updates with c.bank comments, analyst, prices)
By Jana Mlcochova and Robert Mueller
PRAGUE, March 25 (Reuters) - The Czech central bank kept interest rates flat as expected on Thursday, but two board members voted for a cut and the bank hinted weak inflation could possibly open the door to a rate reduction.
Governor Zdenek Tuma said the situation had changed from six weeks ago when the bank last met on rates. At that time its quarterly outlook pointed to stable rates at record lows before a rise in the second half.
"We continue to see the base scenario as the most probable one," Tuma told reporters, after the bank left its key two-week repo rate at 1 percent, level with the European Central Bank's rate.
"Nevertheless, with regards to growth in risks in a moderately anti-inflationary direction, it is true that perhaps it is possible to imagine ... that the next move in rates could be also downward, which we probably saw less likely six weeks ago."
The short end of the interest rate swap curve dropped around 6 basis points after the central bank's comments and vote tally.
The Czech crown
All of 19 analysts surveyed by Reuters had predicted flat rates, citing the strong crown, weak household consumption and slower-than-expected inflation.
Analysts expect policymakers to begin monetary tightening in the second half of the year, but the crown's recent strength and weak consumer data have prompted speculation rate rises could come later and be less aggressive.
MODEST RECOVERY
Pavel Sobisek, chief economist at UniCredit in Prague, said a widening deviation of inflation with the central bank's forecasts, or further appreciation of the crown, could prompt policymakers to cut interest rates. But he still expects interest rates to rise to 1.25 percent by the end of the year. "We have shifted our views recently; we expect only one hike at the very end of this year. I will change that view after this meeting," he said.
The central bank cut rates by 275 basis points between August 2008 and December last year and has held steady since then.
The export-driven economy, which shrank more than 4 percent last year, has been recovering moderately, mainly on improving foreign demand. The economy expanded 0.7 percent quarter-on-quarter in the last three months of 2009.
But with unemployment at a six-year peak, households are keeping a tight rein on their purse strings, eliminating demand-led price pressures.
"Data shows that economic activity will not be the strongest," Tuma said.
When asked about the crown's recent strength, Tuma said continued appreciation would create further anti-inflationary effects. However, he said the board did not pay much attention to the currency's recent strength because it had been a short-term development.
The crown is 1.8 percent stronger than the bank's forecast average exchange rate of 25.8 for this quarter.
Other central banks in central Europe meet next week, with Poland widely expected to keep rates unchanged at 3.5 percent.
Romanian policymakers are seen cutting rates by 50 basis points to 6.50 percent and Hungary is forecast to cut by 25 basis points to 5.50 percent. (Writing by Jason Hovet and Jan Lopatka; editing by John Stonestreet/Susan Fenton)