May 6 (Reuters) - Central European currencies were mixed on
Thursday, ahead of a Czech rate setting meeting in which the
central bank is expected to keep borrowing costs stable, but
which could provide hints at possible pace of policy tightening.
Central European rate-setters are facing rising inflation,
but look set to keep rates low for the time being to help their
economies recover from the effects of the coronavirus.
On Wednesday the Polish central bank kept its main interest
rate at an all-time low of 0.1% despite saying that it sees
above-target inflation in the coming months.
The Czech central bank was also due to present its quarterly
update to its macroeconomic outlook on Thursday.
"Earlier remarks by the central bankers suggested that the
unfavorable epidemics development pushed the central bank
towards lower outlook for the domestic economy," Raiffeisenbank
said in a note.
"This picture, however, cracked somewhat with the GDP result
for the first quarter released last week, which showed the
economy did better than thought."
The Czech crown was 0.10% weaker against the euro
at 25.81 by 0952 GMT.
The Polish zloty continued to slip, weakening
0.29% to 4.5836. Central Europe"s most liquid currency has been
affected by worries concerning upcoming sittings of the Supreme
Court concerning Swiss franc mortgages, a major risk factor for
Polish banks.
"Before we hear the Supreme Court ruling on the Swiss
mortgage saga we expect the volatility to remain elevated," said
Piotr Poplawski, senior economist at ING.
The Hungarian forint was 0.12% stronger at 358.44,
after gains in the previous session.
"This means that the rate fell under the 200-day moving
average of 359.4, but we cannot yet unambiguously say that the
long-term moving average was broken," Erste Bank wrote in a
note.
The bank said that the firming was due to the recent steps
to gradually reopen the economy. "It"s been typical for the
forint so far to react to news about the pandemic in both
directions."
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