WARSAW, July 23 (Reuters) - The forint backed off a

1-1/2 month high on Tuesday ahead of a Hungarian central bank

interest rate decision that could see a continuation of a

long-running easing cycle, or the first pause in cuts.

Respondents in a Reuters poll narrowly expect Hungary's

central bank to deliver its 15th consecutive rate cut, lowering

its base rate by 25 basis points to 6.75%, although the analysts

were almost evenly split between the cut and a first pause in

easing in more than a year.

By 0946 GMT the Hungarian forint slipped 0.2%

against the euro to 390.20, retreating from its strongest

standing since early June hit on Monday.

ING analysts leaned towards a rates pause, but noted the

odds of a 25 basis point reduction were nearly equal.

"Of course, the downside surprise in inflation, the

strongest forint since late May, and the dovish shift in the

global story will make it tempting for the central bank to cut,"

ING said in a note.

Earlier this month, data showed Hungary's headline inflation

easing more than expected in June to an annual 3.7%, after its

two-month rebound, as price growth subsides from its early 2023

peak of 25.7%, the highest rate in any EU country.

ING analysts added that regardless of the rate-setters'

decision, dovish rhetoric expected from the central bank should

be negative for the forint.

"HUF seems overvalued for some time, and today may show its

true value," ING said.

The Czech crown retreated 0.3% to 25.3350 per

euro, as Czech central bank (CNB) Vice-Governor Jan Frait said

in an interview with the Bloomberg news agency that he could not

rule out another 50-basis-point interest rate cut when

policymakers meet next week.

The CNB has cut its main two-week repo rate by 225 basis

points since December to 4.75%, surprising some at the last

meeting in June by delivering a fourth straight 50-bp reduction

before signalling a likely slowdown in the pace of easing.

Czech inflation has returned to the bank's 2% target and is

seen holding this year below 3%, the upper end of the bank's

tolerance band.

In Poland, the zloty edged 0.1% lower to 4.2835

per euro

"The EUR/PLN exchange rate fluctuates around the level of

4.28 and even published data from the domestic economy has no

impact on quotations," Bank Millennium analysts said in a note.

"The stabilization of PLN rates is also supported by the low

volatility of the eurodollar, despite the dynamic situation on

the American political scene."

Data on Monday showed Polish retail sales growing by less

than expected in June, as consumers remained cautious about the

cost of living even with wages rising strongly.

Poland is betting on a wage growth-driven consumer revival

to underpin its economic recovery in 2024.

CEE SNAPSHOT AT

MARKETS 0946 CET

CURRENCI

ES

Latest Previous Daily Change

trade close change in 2024

Czech 25.3350 25.2525 -0.33% -2.50%

crown

Hungary 390.2000 389.3250 -0.22% -1.80%

forint

Polish 4.2835 4.2804 -0.07% +1.42%

zloty

Romanian 4.9730 4.9715 -0.03% +0.03%

leu

Serbian 116.9600 117.0500 +0.08% +0.24%

dinar

Note: calculated from 1800 CET

daily

change

Latest Previous Daily Change

close change in 2024

Prague 1613.61 1615.260 -0.10% +14.12%

0

Budapest 73634.21 73375.88 +0.35% +21.47%

Warsaw 2462.56 2481.28 -0.75% +5.10%

Bucharest 18648.05 18588.28 +0.32% +21.32%

Spread Daily

vs Bund change

in

Czech spread

Republic

2-year 5-year 10-year Poland

2-year 5-year 10-year FORWARD

3x6 6x9 9x12 3M

interban

k

Czech Rep Hungary Poland Note: FRA are for ask prices

quotes

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