CEE MARKETS-Crown eases ahead of c.bank decision, focus on outlook for rate cuts

By Jason Hovet PRAGUE, March 29 (Reuters) - The Czech crown edged lower on Wednesday, ahead of a central bank meeting at which policymakers were likely to hold interest rates steady, although they could push back against expectations of steep cuts coming this year. Czech markets have priced in almost 125 basis points (bps) in rate cuts this year, even as some central bankers have shown no willingness to rush into policy easing with inflation still in double digits. The Czech National Bank is likely to keep its key interest rate at a more than two-decade high of 7.00%, a Reuters poll forecast. Hungary's central bank left its base rate at a European Union-high of 13% on Tuesday and said it would be necessary to keep it there for a prolonged period. The crown and Hungarian forint have been the biggest currency gainers in central Europe this year. On Wednesday, the crown had eased 0.2% to 23.67 to the euro by 0908 GMT after testing a two-week high in the previous session, while the forint nudged 0.1% higher to 380.45 per euro. Easing concerns over global banking turmoil boost risk appetite on Wednesday, mainly giving a boost in central Europe to stock markets, which all climbed. Czech bond yields ticked higher on shorter-dated paper, while a 10-year yield was a touch lower. "Several (Czech central bank) board members have pushed back against the market narrative of cuts by the end of 2023," Komercni Banka trader Marek Lesko said in a client note. "If the governor decides to comment on this one way or another, it might cause large moves on the front end of the curve." The Czech base rate has been on hold since mid-2022 as a revamped central bank ended a year-long hiking cycle by its predecessors even as high inflation still sought a peak. Other central banks in the region have also shifted into steady policy, while markets are seeking clues on who among them might be the first to begin undoing the steep rate hikes taken since 2021. In Poland, the zloty was down 0.1% at 4.684 to the euro. The country's central bank governor has said earlier that he hoped rate cuts could start by the fourth quarter. "The lack of signalling of interest rate cuts from the (Hungarian central bank), together with a similar message that should be sent on Wednesday by the (Czech central bank), should be conducive to a decline in market expectations regarding the scale of interest rate cuts in the CEE-4 region this year," PKO bank said in a note.

CEE SNAPSHO AT

MARKETS T 1108

CET

CURRENC

IES

Latest Previou Daily Change s

bid close change in 2023 EURCZK Czech <EURCZK 23.6700 23.6280 -0.18% +2.06% = crown =>
EURHUF Hungary <EURHUF 380.450 380.800 +0.09% +4.99% = forint => 0 0
EURPLN Polish <EURPLN 4.6835 4.6785 -0.11% +0.13% = zloty =>
EURRON Romanian <EURRON 4.9475 4.9500 +0.05% -0.10% = leu =>
EURHRK Croatian <EURHRK 7.5330 7.5365 +0.05% +0.05% = kuna =>
EURRSD Serbian <EURRSD 117.270 117.300 +0.03% +0.03% = dinar => 0 0

Note: calculated from 1800

daily CET

change

Latest Previou Daily Change s

close change in 2023 .PX Prague 1308.45 1297.49 +0.84% +8.88% 00
.BUX Budapest 42285.5 42119.8 +0.39% -3.44% 6 5
.WIG20 Warsaw <.WIG20 1703.77 1694.12 +0.57% -4.92% >
.BETI Buchares 12108.4 12137.9 -0.24% +3.81% t 6 5
.SBITO Ljubljan <.SBITO 1192.29 1183.39 +0.75% +13.68 P a P> % .BELEX Belgrade <.BELEX 890.55 891.87 -0.15% +8.00% 15 15>
.SOFIX Sofia <.SOFIX 601.11 601.64 -0.09% -0.06% >

Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic
CZ2YT= 2-year <CZ2YT= 5.4430 0.0090 +284bp -1bps RR RR> s
CZ5YT= 5-year <CZ5YT= 4.8960 0.0130 +261bp -1bps RR RR> s
CZ10YT <CZ10YT 4.5710 -0.0070 +228bp -2bps =RR 10-year =RR> s

Poland
PL2YT= 2-year <PL2YT= 6.0430 0.0000 +344bp -2bps RR RR> s
PL5YT= 5-year <PL5YT= 6.0110 -0.0140 +372bp -3bps RR RR> s
PL10YT <PL10YT 6.0730 -0.0190 +378bp -3bps =RR 10-year =RR> s

FORWARD

3x6 6x9 9x12 3M interba nk Czech <CZKFRA 7.11 6.77 6.06 7.18 Rep ><PRIBO

R=>

Hungary <HUFFRA 14.90 13.17 12.10 16.30 ><BUBOR

=>

Poland <PLNFRA 6.84 6.63 6.20 6.90 ><WIBOR

=>

Note: are for ask

FRA prices

quotes

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(Reporting by Jason Hovet in Prague, Alan Charlish in Warsaw, and Gergely Szakacs in Budapest; Editing by Rashmi Aich)

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