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CEE MARKETS-Forint weakens as rates seen on hold despite rising CPI

By Alan Charlish WARSAW, Dec 8 (Reuters) - The Hungarian forint weakened on Thursday, as expectations of stubborn inflation fuelled fears of interest rates falling deeper into negative territory. The Hungarian central bank has said it will stop raising rates, but maintain tight monetary condition for a prolonged period. With the war in Ukraine weighing heavily on growth, central European policymakers are trying to stop raising rates. However, the National Bank of Hungary (NBH) faces a challenge as inflation in the country is expected to accelerate in part due to the government scrapping a price cap on car fuels. Hungarian headline inflation accelerated to an annual 22.5% in November from 21.1% in the prior month, data showed on Thursday. At 0906 GMT, the forint was 0.88% weaker against the euro at 415.00. "The market sees this (rising inflation) as rather a negative for the forint because of the forward-looking real interest rate environment," said Peter Virovacz, senior economist at ING in Budapest. "Checking the rates market, it doesn't seem that the market expects the NBH to react to this fuel price cap story and possibly this means ... higher inflation will be translated into even deeper real negative interest rates." Hungarian oil and energy company MOL was down around 5% after a government decree late on Wednesday showed oil companies would have to pay a 95% special tax rate on the Brent-Ural spread, as of Thursday, up from 40% previously, sharply hiking the existing windfall tax to plug budget holes. The Polish zloty was 0.16% firmer at 4.685, as markets looked ahead to a press conference with central bank governor Adam Glapinski scheduled for 1400 GMT. Poland's Monetary Policy Council (MPC) kept its main interest rate on hold at 6.75% for the third month in a row on Wednesday, firming up expectations that the tightening cycle is over. The Czech crown was 0.12% weaker at 24.29, while the Romanian leu was broadly stable at 4.916. CEE SNAPSHOT AT MARKETS 1006 CET CURRENCIES Latest Previous Daily Change bid close change in 2022 EURCZK= Czech % EURHUF= Hungary % EURPLN= Polish % EURRON= Romanian % EURHRK= Croatian % EURRSD= Serbian % % Note: calculat 1800 daily ed from CET change Latest Previous Daily Change close change in 2022 .PX Prague 1172.28 1177.640 -0.46% 0 .BUX Budapest 43790.28 44614.88 -1.85% -13.66 % .WIG20 Warsaw 1734.36 1735.66 -0.07% -23.49 % .BETI Bucharest 12258.05 12228.85 +0.24 -6.15% % .SBITOP Ljubljana <.SBITOP 1076.17 1074.24 +0.18 -14.28 > % % .CRBEX Zagreb 1918.45 1919.02 -0.03% -7.74% .BELEX15 Belgrade <.BELEX1 811.82 814.66 -0.35% -1.09% 5> .SOFIX Sofia 605.71 606.11 -0.07% -4.71% Yield Yield Spread Daily (bid) change vs change Bund in Czech spread Republic CZ2YT=RR 2-year ps CZ5YT=RR 5-year ps CZ10YT=R 10-year ps Poland PL2YT=RR 2-year ps PL5YT=RR 5-year ps PL10YT=R 10-year ps FORWARD 3x6 6x9 9x12 3M interb ank Czech Rep 7.06 6.61 6.05 7.26 Hungary 14.85 13.25 12.27 15.94 Poland 7.09 6.95 6.59 7.19 Note: FRA are for quotes ask prices ***************************************** ********************* (Reporting by Alan Charlish in Warsaw and Anita Komuves in Budapest; Editing by Sherry Jacob-Phillips)