CEE MARKETS-Crown eases as inflation drop cuts likelihood of rate hike

* Czech annual inflation falls to 2.6 pct from 2.9 pct

* Fall reduces chance of another CNB rate hike on Dec. 21

* Forint again approaches one-year low

* Romanian interbank rates retreat from multi-year highs

BUDAPEST/BUCHAREST, Dec 11 (Reuters) - Central Europe's main currencies eased on Monday, bitten by Czech data showing lower inflation, reducing the chance of another rate rise by the Czech central bank (CNB) this month. Czech annual inflation dropped to 2.6 percent in November from 2.9 percent in October. The Czech crown eased by 0.15 percent to 25.594 against the euro at 0947 GMT. The inflation figure was in line with expectations. It is still well above the 2 percent target, but the decline still makes it less likely that the CNB, the region's most hawkish central bank, will raise rates again at its Dec. 21 meeting after two increases since August. "Tightening (rates) is appropriate but does not demand any urgent steps. December's CNB policy meeting will be exciting but is not likely to bring a change in rates," said Pavel Sobisek, UniCredit's chief economist in Prague. A further interest rate increase is expected to strengthen the crown next year. The crown has been the world's top-performing currency this year with a 5.5 percent gain against the euro. CNB Governor Jiri Rusnok last week said the rise in interest rates would be gentle and gradual next year. The forint eased in tandem with the crown. It approached one-year lows reached on Friday at 315.14 against the euro after November inflation data signaled the Hungarian central bank is unlikely to change its ultra-loose monetary stance. Wages have surged in Hungary, like elsewhere in the region, but there has been no impact yet, Raiffeisen analyst Zoltan Torok said in a note. Inflation could rise from November's 2.5 percent, but forecasts still point downwards rather than upwards, underpinning the central bank's super-easy monetary policy, he added. The zloty eased slightly, but at 4.2045 it remains near six-month highs. It performed well this year thanks to strong and balanced Polish economic growth, coupled with expectations for central bank rate increases to start late next year. On Friday, as expected, the Polish parliament approved an overhaul of the judiciary -- defying threats of legal action from the EU -- and Finance Minister Mateusz Morawiecki was designated as the new prime minister. In Romania, where a similar judiciary overhaul triggered protests over the weekend, the leu was little changed. Investors waited for guidance from the central bank on whether it wants to cut or increase liquidity in interbank markets, where the three-month benchmark rate was bid at 1.71 percent, down from last week's three-year high of 1.75 percent.



Latest Previo Daily Change


bid close change in


Czech crown 25.594 25.554 -0.15% 5.52% 0 5 Hungary 314.35 313.82 -0.17% -1.76% forint 00 00 Polish zloty 4.2045 4.2020 -0.06% 4.74% Romanian leu 4.6322 4.6316 -0.01% -2.10% Croatian 7.5425 7.5508 +0.11 0.17% kuna % Serbian 119.68 119.62 -0.05% 3.07% dinar 00 00 Note: daily calculated previo close 1800 change from us at CET


Latest Previo Daily Change


close change in


Prague 1061.7 1062.3 -0.05% +15.2 8 5 1% Budapest 38190. 38232. -0.11% +19.3 38 56 3% Warsaw 2409.5 2408.8 +0.03 +23.7 3 3 % 0% Bucharest 7691.7 7693.5 -0.02% +8.56 1 5 % Ljubljana 780.37 780.04 +0.04 +8.75 % % Zagreb 1850.5 1849.1 +0.08 -7.23% 9 4 % Belgrade 742.54 741.79 +0.10 +3.51 % % Sofia 665.00 665.29 -0.04% +13.4


Yield Yield Spread Daily (bid) change vs change Bund in Czech spread


2-year 0.066 -0.007 +080b -2bps


5-year 0.795 0.062 +117b +6bps


10-year 1.409 -0.015 +111b +0bps

ps Poland

2-year 1.656 -0.006 +239b -1bps


5-year 2.626 -0.013 +300b -1bps


10-year 3.223 -0.025 +293b -1bps



interb ank

Czech Rep <PR 1 1.18 1.32 0


Hungary <BU 0.03 0.06 0.1 0.03


Poland <WI 1.78 1.83 1.93 1.72


Note: FRA are for ask quotes prices ******************************************************** *****

(Additional reporting by Jason Hovet in Prague and Lidia Kelly in Warsaw; Editing by David Goodman)