CEE ECONOMY-Polish inflation below expectations in January

Feb 15 (Reuters) - Polish headline inflation climbed to a lower-than-expected rate of 17.2% year-on-year in January, staying under a high seen in October, as the central bank maintains stable interest rates while waiting for price growth to begin easing. Following sharp hiking cycles, policymakers around central Europe have shifted to a wait-and-see mode on rates, even as major central banks such as the U.S. Federal Reserve and the European Central Bank are now in tightening mode. Poland's central bank expects inflation to pick up in the first quarter before it starts falling back into single digits later this year. Bank Governor Adam Glapinski last week said it was too early to discuss potential cuts to the main policy rate, which stands at 6.75% after a series of hikes from 0.10% in 2021-22. The Polish Economic Institute said that while a peak in inflation may be lower than expected, inflationary pressures remained. "We still expect inflation to average 13% in 2023," it said in a comment. "Lower price growth will now be offset by a slower decline in core inflation in Q2 and Q3." Inflation around central Europe has picked up to start 2023, with utility bills resetting in some countries and companies carrying out repricing activities. Hungary reported higher-than-expected annual inflation of 25.7% in January, while Czech inflation accelerated to 17.5%. Price growth has been stronger in the European Union's emerging east, where labour markets are stronger and wage growth is a concern for central banks, keeping the chance of rate hikes still on the table in most cases. (Reporting by Jason Hovet in Prague and Alan Charlish in Warsaw; Editing by Shounak Dasgupta)