CEE MARKETS-Forint underperforms central European currencies on faster rate cut bets

By Anita Komuves BUDAPEST, Jan 17 (Reuters) - The Hungarian forint eased to two-week-lows versus the euro on Wednesday, underperforming central European currencies after a top central banker's comments fuelled expectations of a faster pace of rate cuts. Expectations of interest rates between 6% and 7% by mid-204 are realistic, the Hungarian central bank's Deputy Governor Barnabas Virag told Reuters after December data last week showed inflation falling to 5.5%, well below expectations. "There are as many arguments in favour of reducing interest rates by 75 basis points (bps) or by 100 bps at the end of January rate-setting meeting," he said. The forint fell following Virag's comments as it added to expectations for a 100 bps cut at the next meeting instead of the previous 75 bps cuts, a Budapest-based trader said. The currency was down 0.26%, trading at 380.65 per euro after falling to a two-week low at 381 earlier in the session. The National Bank of Hungary has cut borrowing costs by 725 bps since May to 10.75%. But, faced with a sagging economy and a heavy 2024 election calendar, Prime Minister Viktor Orban's government has pressured the bank for even sharper cuts. The NBH will hold its next policy meeting on Jan. 30. The bank is too cautious with rate cuts given the pace of decline in price growth, Economy Minister Marton Nagy said on Tuesday. Elsewhere, the Polish zloty eased 0.19% to 4.3975 per euro, extending its losses from the previous sessions as it was under pressure by political battles in Warsaw. The Czech crown slid 0.21% to 24.782 per euro after a central banker said that interest rates can continue dropping after policymakers began easing monetary conditions last month. "Given the lack of a political solution and heavy long positioning built over the previous two months, we are leaning more to the bearish side and a test of 4.400 EUR/PLN today would not be a surprise for us," ING wrote in a note. Czech producer prices fell deeper than expected on the month in December, data showed on Wednesday, adding to chances of a steady stream of rate cuts. "Today's producer prices figures are creating favourable conditions for the fall of inflation right from the start of this year," Banka Creditas chief economist Petr Dufek said. Stocks in the region were lower, with Warsaw's index leading losses, shedding 1.28%. CEE MARKET S SNAPSH OT AT 1106 CET CURREN CIES Latest Previo Daily Change trade us change in close 2024 EURCZK Czech 0 0 EURHUF Hungary 00 00 % EURPLN Polish EURRON Romania % % EURRSD Serbian 00 00 % % Note: daily change calculated from 1800 CET Latest Previo Daily Change us change in close 2024 .PX Prague 1443.5 1445.8 -0.16% +2.09 4 300 % .BUX Budapes 63154. 63292. -0.22% +4.18 t 36 90 % .WIG20 Warsaw <.WIG2 2180.3 2208.5 -1.28% -6.94% 0> 7 4 .BETI Buchare <.BETI 15687. 15780. -0.59% +2.06 st > 90 71 % Spread Daily vs change Bund in spread Czech Republi c CZ2YT= ps CZ5YT= ps CZ10YT ps Poland PL2YT= 0 ps PL5YT= ps PL10YT ps FORWAR D 3x6 6x9 9x12 3M interb ank Czech Hungary Poland Note: FRA quotes are for ask prices *************************************** *********************** (Additional reporting by Jason Hovet in Prague and Anna Wlodarczak-Semczuk in Warsaw; Editing by Varun H K)