By Krisztina Than

BUDAPEST, Sept 10 (Reuters) - Hungary's forint slipped

after lower-than-expected inflation data for August rekindled

market expectations that the central bank could resume policy

easing at its meeting later this month.

The Hungarian and Czech central banks have been the most

active among central European peers in easing policy since last

year but are beginning to slow or possibly pause their steady

rate cuts.

Before deciding to keep rates flat in August, Hungary's

central bank had delivered 15 consecutive cuts totalling 1,125

basis points. The main rate stands at 6.75%.

Data on Tuesday kept the option of further cuts open - along

with pressure from the government to ease policy more - as it

showed year-on-year inflation eased to 3.4% in August from 4.1%

in July, coming in below a Reuters poll forecast of 3.6%.

It was the lowest rate since February 2021. But core

inflation still came in at 4.6%.

An FX dealer in Budapest said the forint's weakness was

mostly due to domestic factors, but a strong dollar did not help

either.

"The forint is weaker due to comments from policymakers in

the past days on the change expected at the helm of the central

bank, plus the August CPI data indicates that the central bank

may cut interest rates further, which does not help either," the

dealer said.

"This is a multi-factor story, but I would say it is

predominantly domestic factors that are weighing on the forint."

Economy Minister Marton Nagy told Inforadio late on Monday

that the Hungarian bank had "won the fight with inflation",

saying too restrictive a policy would hurt the economy.

The forint, whose weakness in recent months has

been a constraint on the central bank, eased 0.1% to 397.40 to

the euro by 0730 GMT on Tuesday before regaining some ground,

while other currencies in Central Europe firmed slightly.

Czech data showed on Tuesday that inflation stagnated at

2.2% year-on-year last month despite market and central bank

expectations of a drop. But analysts said the data would not

sour policymakers on more rate cuts.

"We believe the central bank board has space to continue its

cycle of rate cuts given the favourable inflation development

and still unflattering performance in the economy," Raiffeisen

said, forecasting a 25-bp cut at the September meeting and

subsequent meetings this year.

The crown slightly backed away from a test of the

psychological 25 per euro level after the data, trading weaker

on the day.

Elsewhere, the Polish zloty and Romanian leu

were both little changed.

CEE SNAPSHOT AT

MARKETS 0930

CET

CURRENCIES

Latest Previo Daily Change

us

trade close change in 2024

Czech 0

Hungary 00

Polish Romania Serbian 00

Note: calculated from 1800 CET

daily

change

Latest Previo Daily Change

us

close change in 2024

Prague 1585.62 1588.7 -0.20% +12.14%

500

Budapes 72329.29 72075. +0.35% +19.32%

t 48

Warsaw 9

Buchare 17634.23 17477. +0.89% +14.72%

st 86

Spread Daily

vs Bund change in

Czech spread

Republi

c

0

Poland

0

FORWARD RATE

AGREEMENTS

3x6 6x9 9x12 3M

interbank

Czech Hungary Poland Note: are for ask prices

FRA

quotes

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