CEE MARKETS-Uncertainty over rates for bank loans weighs on forint

By Anna Wlodarczak-Semczuk WARSAW, Jan 29 (Reuters) - Central European currencies were mostly stable on Monday, but the Hungarian forint fell after local media reported the government would press on with a reform of lending rates despite opposition from the central bank. Last week Hungary's central bank criticised Prime Minister Viktor Orban's proposal to replace Budapest interbank rates with a much lower benchmark for new corporate loans as part of efforts to boost lending. On Sunday, local media quoted Finance Minister Mihaly Varga as saying it was up to the government to decide on the reform. "Now that this spat between economy ministry and central bank is back on the markets' radar, the forint is unsurprisingly weakening," Commerzbank wrote in a note. By 0849 GMT the forint was down 0.4% at 389 per euro, underperforming central European currencies and extending its losses for the year to 1.5%. Also weighing on the forint, the National Bank of Hungary (NBH) is likely to accelerate the pace of rate cuts to 100 basis points on Tuesday, lowering its base rate to 9.75%, a Reuters poll showed on Friday. Erste Bank expects a 100 bp cut as it sees indications that January's headline inflation may fall within the 2%-4% tolerance band of the central bank. "We believe that the Hungarian central bank will take the opportunity to frontload interest rate cuts and may slow the pace later in the year when the inflation outlook changes," Erste Bank analysts wrote in a note. However, some economists anticipate a more cautious 75 bps reduction. Investors will also monitor this week's Federal Reserve decision on interest rates and U.S. labour market data. "Until then, the EUR/PLN exchange rate should remain in a consolidation range, oscillating around the level of 4.37," Bank Millenium analysts said. On Monday, the zloty was stable at 4.3655 per euro. Poland's finance ministry will offer bonds worth 5-7 billion zlotys at an auction. "The slightly reduced offer compared to the original plan, together with the high liquidity of the banking sector, should ensure solid interest in the auction," Bank Millennium said. Elsewhere the Czech crown was stable at 24.7470 per euro. Markets are pricing in a second 25 bp cut to follow the start of an easing cycle launched in December. Last week's weakening of the Romanian leu was most likely curbed by the central bank just below 4.98, which seems to be its new "line in the sand", Erste bank said. On Monday, it was traded at 4.9760 per euro. CEE SNAPSHOT AT 0949 CET MARKETS CURRENCIES Latest Previous Daily Change bid close change in 2024 EURCZK= Czech 24.7470 24.7600 +0.05 -0.18% crown % EURHUF= Hungary 389.0000 387.4000 -0.41% -1.49% forint EURPLN= Polish 4.3655 4.3675 +0.05 -0.48% zloty % EURRON= Romania 4.9760 4.9770 +0.02 -0.03% n leu % EURRSD= Serbian 117.1400 117.1950 +0.05 +0.09% dinar % Note: calculated from 1800 daily CET change Latest Previous Daily Change close change in 2024 .PX Prague 1449.26 1447.360 +0.13 +2.49% 0 % .BUX Budapes 63254.84 64092.56 -1.31% +4.35% t .WIG20 Warsaw 2220.73 2223.47 -0.12% -5.22% .BETI Buchare 15218.47 15126.22 +0.61 -0.99% st % Spread Daily vs change Bund in Czech Republic spread CZ2YT=R ps CZ5YT=R ps CZ10YT= ps Poland PL2YT=R ps PL5YT=R ps PL10YT= ps FORWARD 3x6 6x9 9x12 3M interba nk Czech < 5.66 4.54 3.67 6.58 Rep PRIBOR=> Hungary < 7.18 5.82 5.41 9.35 BUBOR=> Poland < 5.69 5.39 5.04 5.86 WIBOR=> Note: are for ask prices FRA quotes ******************************************************* ******* (Reporting by Anna Wlodarczak-Semczuk in Warsaw, Jason Hovet in Prague, Gergely Szakacs in Budapest; Editing by Barbara Lewis)