Home Markets CEE MARKETS-Zloty betters peers as inflation reading sparks rate hike expectations

CEE MARKETS-Zloty betters peers as inflation reading sparks rate hike expectations

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By Anita Komuves BUDAPEST, July 30 (Reuters) – The Polish zloty gained on Friday, outperforming its peers, as a higher-than-expected flash inflation reading raised expectations of tightening in the country where policymakers so far resisted normalising rates. The zloty firmed 0.23% to 4.5670 per euro as flash CPI data came in at 5% year-on-year in July, above expectations, rising from 4.4% year-on-year in June. “Inflation is much higher than expected, which will push up expectations of policy normalisation,” an FX trader in Warsaw said. “However, the market reaction is muted and the zloty is only slightly stronger because we have to wait until November for a possible rate hike decision.” The Polish central bank has not raised rates yet, even as its counterparts in Hungary and the Czech Republic tightened policy in June to fight inflation as economies had started rebounding from pandemic lows. The Hungarian central bank delivered its second rate hike on…

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