March 8, 2018 / 10:19 AM / 12 days ago

CEE MARKETS-Polish bonds yields, zloty ease as later rate hike priced in

    * Zloty sets 3-month low after new central bank forecasts
    * Polish central bank chief sees no hike until end-2020
    * Investors watch ECB meeting, U.S. data
    * Hungary's inflation dips, monetary policy seen loose

    By Sandor Peto
    BUDAPEST, March 8 (Reuters) - The zloty, Warsaw-listed bank
stocks and Polish government bond yields eased on Thursday after
the head of the country's central bank (NBP) pushed back its
projected schedule for interest rate hikes.
    Adam Glapinski said late on Wednesday, after the bank
lowered inflation forecasts, that he saw no reason to raise
interest rates until the end of 2020.
    Analysts had pegged the first likely hike from record-low
rates to early next year.
    Polish forward rate agreements did not fully price
in the change in Glapinski's forecast, projecting the first hike
for July 2019, mBank analysts said in a note.
    After Glapinski's comments the zloty set a three-month low
against the euro. On Thursday it traded near the lows, at 4.2069
at 0859 GMT, down 0.05 percent from its previous close.
    Polish government bond yields dropped by a few basis points.
    Warsaw's bluechip equities index fell 0.4 percent,
while shares in other regional bourses rose. The index of
Warsaw-listed bank stocks dropped about 1 percent.
    A slower rise in interest rates means less opportunity for
lenders to boost revenues.
    Analysts in a Reuters poll earlier this week projected that
Central Europe's robust growth and the prospects of monetary
tightening could lift the Czech crown, the forint
 and the zloty over the coming year.
    Investors will watch if Thursday's European Central Bank
meeting or Friday's U.S. payrolls figures add to expectations
for monetary tightening in those markets, which would make
currencies and bonds in emerging Europe relatively less
    Inflation figures from central Europe are unlikely to change
monetary policy prospects in the near term.
    Hungary reported 1.9 percent annual inflation for February
on Thursday, a tick below analysts' forecasts, but they said
that was unlikely to change the stance of the National Bank of
Hungary, which is already running one of the loosest monetary
policies in the world.
    The Czech Republic is also seen reporting a fall in annual
inflation in February to 2 percent on Friday, but the central
bank there remains worried over the inflation trend and is
expected to increase interest rates further.
    Czech labour data released on Thursday showed the lowest
jobless rate since 1997.  
            CEE       SNAPSHOT   AT                         
            MARKETS             0959 CET            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2018
 Czech      <EURCZK=   25.4160   25.4310    +0.06%    +0.50%
 crown      >                                       
 Hungary    <EURHUF=  312.1000  312.1400    +0.01%    -0.38%
 forint     >                                       
 Polish     <EURPLN=    4.2069    4.2050    -0.05%    -0.73%
 zloty      >                                       
 Romanian   <EURRON=    4.6590    4.6635    +0.10%    +0.44%
 leu        >                                       
 Croatian   <EURHRK=    7.4360    7.4275    -0.11%    -0.08%
 kuna       >                                       
 Serbian    <EURRSD=  117.8400  117.9700    +0.11%    +0.56%
 dinar      >                                       
 Note:      calculated from               1800 CET          
                      Latest    Previous  Daily     Change
                                close     change    in 2018
 Prague                1115.52  1112.980    +0.23%    +3.47%
 Budapest             38476.21  38186.20    +0.76%    -2.29%
 Warsaw                2350.53   2359.57    -0.38%    -4.50%
 Bucharest             8453.44   8443.16    +0.12%    +9.02%
 Ljubljana  <.SBITOP    810.69    809.32    +0.17%    +0.53%
 Zagreb                1850.99   1851.65    -0.04%    +0.44%
 Belgrade   <.BELEX1    736.71    741.74    -0.68%    -3.04%
 Sofia                  684.76    687.42    -0.39%    +1.08%
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
 Czech                                              spread
   2-year   <CZ2YT=R    0.8580    0.0290   +139bps     +2bps
   5-year   <CZ5YT=R    1.3040    0.0370   +126bps     +4bps
   10-year  <CZ10YT=    1.9650    0.0100   +130bps     +1bps
   2-year   <PL2YT=R    1.5960   -0.0080   +213bps     -2bps
   5-year   <PL5YT=R    2.5160   -0.0310   +247bps     -3bps
   10-year  <PL10YT=    3.2750   -0.0060   +261bps     -1bps
            FORWARD   RATE      AGREEMEN                    
                      3x6       6x9       9x12      3M
 Czech Rep                0.97      1.09      1.24      0.91
 Hungary                  0.07      0.10      0.18      0.02
 Poland                   1.74      1.75      1.82      1.72
 Note: FRA  are for ask prices                              

 (Additional reporting by Marcin Goclowski in Warsaw/Luiza Ilie
in Bucharest; editing by John Stonestreet)
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