CEE MARKETS-Forint hits eight-week low as c.bank shifts rate hikes to lower gear

       By Gergely Szakacs
    BUDAPEST, Sept 24 (Reuters) - Hungary's forint hit
an eight-week low against the euro on Friday, extending its
losses for a third straight session, after the central bank
slowed the pace of rate rises despite lifting its inflation
forecasts.
    At 0801 GMT, the forint was down 0.3%, leading losses in
central Europe and giving up a large part of its gains posted
this year.
    The Hungarian and Czech central banks both started raising
rates in June, boosting the forint and the crown by
some 3% versus the euro ahead of Tuesday's Hungarian rate
meeting, when the bank raised rates by a smaller-than-expected
15 basis points to 1.65%.
    Despite raising its inflation forecasts for this year and
the next, the National Bank of Hungary (NBH) said it would hike
rates further in 15-basis-point steps, slowing the pace of
tightening after three successive 30-basis-point hikes.
    The forint fell over 1% versus the euro since Tuesday,
paring its gains for the year to 1.6%. The crown's gains,
meanwhile, still exceed 3% this year as the debate among Czech
rate setters is shifting towards faster tightening.
    "The NBH is in a bind as it would need to continue raising
rates due to high inflation, however, they cannot hike too much
further as that could trigger a backlash," a currency dealer in
Budapest said.
    "The elections are coming, many people are indebted and big
rate rises would probably not be good news for them," the trader
said, adding that potential spillover risks from the Evergrande
crisis and rising energy prices also weighed on sentiment.
    Earlier on Friday, Hungarian Prime Minister Viktor Orban
said he aimed to speed up an extra month of payment to
pensioners as he ramped up a pre-election spending spree ahead
of what promises to be a closely-fought ballot early next year.

    Last week, Orban also eased repayment rules for retail
credit card loans and overdraft credit as part of an extended
debt moratorium, making banks charge lower interest rates on
such borrowing.
    The Polish zloty fell 0.2% in early trade, while
the crown was 0.1% weaker. Budapest stocks also
underperformed the region with a 0.45% retreat as all blue-chip
shares were mildly in the red.
                   CEE      SNAPSHO   AT
                   MARKETS  T        1001
                                     CET
                            CURRENC
                            IES
                            Latest   Previou  Daily    Change
                                     s
                            bid      close    change   in 2021
 EURCZK  Czech     EURHUF  Hungary   0        0
 EURPLN  Polish    EURRON  Romanian  EURHRK  Croatian  EURRSD  Serbian   0        0
         Note:     calculated from            1800
         daily                                CET
         change

                            Latest   Previou  Daily    Change
                                     s
                                     close    change   in 2021
 .PX     Prague             1308.80  1307.55   +0.10%   +27.42
                                          00                 %
 .BUX    Budapest           51714.4  51946.8   -0.45%   +22.82
                                  7        6                 %
 .WIG20  Warsaw    %
 .BETI   Buchares           12476.3  12395.2   +0.65%   +27.24
         t                        5        8                 %
 .SBITO  Ljubljan  %
 .CRBEX  Zagreb    %
 .BELEX  Belgrade  .SOFIX  Sofia     %

                            Yield    Yield    Spread   Daily
                            (bid)    change   vs Bund  change
                                                       in
         Czech                                         spread
         Republic
 CZ2YT=    2-year  s
 CZ5YT=    5-year  s
 CZ10YT            s
         Poland
 PL2YT=    2-year  s
 PL5YT=    5-year  s
 PL10YT            s
                   FORWARD
                            3x6      6x9      9x12     3M
                                                       interba
                                                       nk
         Czech     Hungary   Poland    Note:     are for ask
         FRA       prices
         quotes
         ********************************************
         ******************

 (Reporting by Gergely Szakacs; Editing by Rashmi Aich)



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