PRAGUE, July 10 (Reuters) - The crown fell to a

three-month low on Wednesday after a surprise drop in the Czech

headline inflation rate sparked bets the central bank could cut

interest rates quicker than expected.

The crown's 0.5% drop made it the biggest faller

in central Europe, where other currencies were able to gain.

Czech inflation eased to 2.0% year-on-year in June, well

below a Reuters poll forecast of 2.5% and central bank

expectations.

The Czech National Bank (CNB) has delivered four straight 50

basis-point rate cuts but has signalled a likely slowdown to

that tempo at upcoming meetings.

The crown had slipped to 25.397 to the euro by 0819 GMT,

hitting a session low of 25.425, its lowest since April. Market

rates also fell by between 12 and 15 basis points, although

investors are still pricing in a 25 bp cut coming at the bank's

August meeting.

"Downward pressure on CNB rates is likely to intensify after

today's data," Martin Gurtler, analyst at Komercni Banka, said.

With consensus seeing the main rate at 4%, from the current

4.75%, at the end of the year, he said the chances of it falling

below that are growing.

Elsewhere, the Polish zloty continued to march

higher after National Bank of Poland governor Adam Glapinski

said last week that interest rate cuts would not happen before

2026.

The zloty added 0.25% on Wednesday, to 4.2515 to the euro,

approaching its four-year high just past 4.25.

Hungary's forint recovered ground, coming after

losses following inflation data there below expectations and

announcements of new government tax measures. The forint was

0.45% up at 393.05 per euro.

MHB Bank said markets may be starting to view the measures -

including seeking so-called defence fund contributions from

banks and other companies - as being "aimed at keeping the

budget deficit under control, so investors should be less

concerned that the risks surrounding the deficit target are not

being addressed by the cabinet."

CEE SNAPSHOT AT

MARKETS 1019

CET

CURRENCIES

Latest Previo Daily Change

us

trade close change in 2024

Czech 0

Hungary 00

Polish Romania Serbian 00

Note: calcula 1800 CET

daily ted

change from

Latest Previo Daily Change

us

close change in 2024

Prague 1574.82 1570.2 +0.29% +11.37

700 %

Budapes 71532.96 71169. +0.51% +18.00

t 33 %

Warsaw 5

Buchare 18374.25 18334. +0.22% +19.54

st 03 %

Spread Daily

vs Bund change

in

Czech spread

Republi

c

0

0

0

Poland

0

0

0

FORWARD RATE

AGREEMENTS

3x6 6x9 9x12 3M

interba

nk

Czech Hungary Poland Note: are for

FRA ask

quotes prices

(Reporting by Jason Hovet in Prague and Boldizsar Gyori in

Budapest; Editing by David Holmes

)