CEE MARKETS-Zloty eases, central bank seen cutting CPI forecast

    * Polish central bank seen cutting CPI forecasts, holding
fire
    * NBP seen maintaining bias despite planned fiscal spending
rise
    * Romanian stocks hit 2-and-1/2-month high

    By Sandor Peto
    BUDAPEST, March 6 (Reuters) - The zloty mildly eased on
Tuesday ahead of a likely cut in the Polish central bank's
inflation forecasts at its monthly meeting, where it is expected
to keep interest rates on hold.
    The zloty traded close to 4.3 against the euro, a
psychological line and also its 200-day moving average.
    The Polish central bank (NBP) has become Central Europe's
most dovish central bank since a shift towards a more hawkish
rhetoric by the National Bank of Hungary in January.
    The NBP has kept its main interest rate at a
record low 1.5 percent for four years, 
    The zloty has moved in a tight 2 percent range against the
euro since July last year.
    It was almost motionless for months before low inflation
figures weakened it to 4.3455, before a government spending
increase plan announced late last month boosted it 4.294 by
Monday.     
    After several dull meetings, there is a chance that
Tuesday's comments from the bank "will be way more interesting
than usual", Santander Bank Polska analysts said in a note.
    Poland's annual inflation ran at 0.9 percent in January,
well below the NBP's 1.5-3.5 percent target range, and the bank
could cut its inflation forecasts at the meeting, analysts said.
    However, the comments of rate setters have turned more
hawkish since the ruling nationalist PiS party, preparing for
elections, announced its spending plan.  

    Overall, the NBP's bias are unlikely to change, the
Santander analysts said.
    "We do not expect governor Glapiński to withdraw his
declaration of stable rates until 2020... and the overall tone
of his comments will remain dovish," they said.
    The rate-setting panel is dominated by doves, but the bank
may need to face growing demand-led inflation pressure due to
the fiscal plans, Rabobank analyst Piotr Matys said in a note.
    "Any indication during today's press conference that the
commitment to maintain record low interest rates seems to be
fading amongst Polish rate setters would be a hawkish signal
that could potentially provide the zloty with support," he
added.
    Polish government bond yields were either steady or tracked
German peers lower by 1-2 basis points, with 5-year papers
trading at 2.265 percent.
    Elsewhere, Romania led a rise in equities in the region.
    A continuing rebound in Banca Transilvania stocks
helped Bucharest's main index rise half a percent to its
highest level since the Romanian government announced
controversial new taxes on banks and energy firms.
    Romanian stocks got a boost this week from hopes for changes
in the taxes and in highly contested new share capital
requirements on private pension funds whose managers met
Romanian official on Tuesday to open discussions about the
issue. 
    
            CEE       SNAPSHOT   AT                         
            MARKETS             1021 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2019
 Czech      <EURCZK=   25.6200   25.6180    -0.01%    +0.34%
 crown      >                                       
 Hungary    <EURHUF=  315.5800  315.5000    -0.03%    +1.74%
 forint     >                                       
 Polish     <EURPLN=    4.2998    4.2975    -0.05%    -0.24%
 zloty      >                                       
 Romanian   <EURRON=    4.7475    4.7478    +0.01%    -1.97%
 leu        >                                       
 Croatian   <EURHRK=    7.4220    7.4225    +0.01%    -0.16%
 kuna       >                                       
 Serbian    <EURRSD=  117.8800  118.0100    +0.11%    +0.36%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2019
 Prague                1079.09  1076.630    +0.23%    +9.38%
                                       0            
 Budapest             40813.03  40718.50    +0.23%    +4.28%
 Warsaw                2324.62   2321.32    +0.14%    +2.11%
 Bucharest             7953.57   7914.44    +0.49%    +7.72%
 Ljubljana  <.SBITOP    857.35    856.60    +0.09%    +6.60%
            >                                       
 Zagreb                1765.03   1767.18    -0.12%    +0.93%
 Belgrade   <.BELEX1    694.29    694.07    +0.03%    -8.85%
            5>                                      
 Sofia                  584.54    582.98    +0.27%    -1.67%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    1.9080    0.1150   +241bps    +12bps
            R>                                      
   5-year   <CZ5YT=R    1.8240    0.0200   +215bps     +3bps
            R>                                      
   10-year  <CZ10YT=    1.9240    0.0080   +177bps     +2bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.6270   -0.1160   +213bps    -11bps
            R>                                      
   5-year   <PL5YT=R    2.2740   -0.0170   +260bps     -1bps
            R>                                      
   10-year  <PL10YT=    2.9210   -0.0120   +277bps     +0bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                2.25      2.31      2.32      2.03
            <PRIBOR=                                
            >                                       
 Hungary                  0.42      0.64      0.86      0.15
                                                    
 Poland                   1.75      1.76      1.76      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 *************************************************          
 *************                                      
 
 (Additional reporting by Luiza Ilie in Bucharest)
  
 
 

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