Updates after Polish central bank rates decision

PRAGUE, July 8 (Reuters) - Poland's zloty cut some losses on Wednesday as its central bank kept interest rates steady as expected, after a breakdown in Middle East peace prospects triggered risk aversion that pushed the currency to a 19-month low earlier in the day.

The National Bank of Poland left its main interest rate at 3.75% on Wednesday, remaining cautious despite inflation slowing in June, as the bank's new inflation forecasts showed faster than previously expected price growth this year and next.

The previous NBP projection released in early March did not account for the impact of war in the Middle East.

According to mBank analysts, the central bank's new forecast still showed inflation at a "comfortable level".

"We can pretty much forget about any changes to interest rates in the near future," they wrote in a post on X.

Inflation in central Europe had been slowing since it was clear that the two warring countries were looking to halt hostilities that had caused oil prices to surge and hurt the global economic outlook.

MIDDLE EAST WORRIES

However on Wednesday U.S. President Donald Trump said the memorandum of understanding signed with Iran to end their nearly four-month conflict in June was "over".

Earlier, Iran's Revolutionary Guards said they had targeted U.S. military sites in Bahrain and Kuwait after the U.S. launched a wave of military strikes on Iran in response to attacks on tankers in the Strait of Hormuz.

Oil prices LCOc1CLc1 were up around 5% on Wednesday after Trump's remarks.

The zloty EURPLN= eased 0.14% against the euro to 4.3040 by 1420 GMT, off a session low of 4.3174, its weakest since November 2024.

The forint EURHUF= was down 0.9% at 357.90 to the euro, while the Czech crown EURCZK= edged 0.1% lower to 24.2550 per euro.

In Romania, the leu EURRON= was steady at 5.2333 per euro after Romania's central bank also left its key rate unchanged at 6.5% as expected, at the European Union's highest level.

CEE MARKETS SNAPSHOT AT 1620 CET
CURRENCIES		Latest trade	Previous close	Daily change	Change in 2025
Czech crown	EURCZK=	24.2550	24.2330	-0.09%	-0.36%
Hungary forint	EURHUF=	357.9000	354.7500	-0.88%	+7.39%
Polish zloty	EURPLN=	4.3040	4.2980	-0.14%	-2.05%
Romanian leu	EURRON=	5.2333	5.2330	-0.01%	-2.66%
Serbian dinar	EURRSD=	117.2700	117.3400	+0.06%	+0.03%
Note: daily change calculated from 1800 CET
BONDS		Yield (bid)	Yield change	Spread vs Bund	Daily change in spread
Czech Rep 2-year	CZ2YT=RR	3.9166	0.0838	+124bps	-1bps
Czech Rep 5-year	CZ5YT=RR	4.1462	0.0829	+136bps	+0bps
Czech Rep 10-year	CZ10YT=RR	4.6945	0.0000	+163bps	-8bps
Poland 2-year	PL2YT=RR	4.1160	-0.1250	+144bps	-22bps
Poland 5-year	PL5YT=RR	4.8340	0.0040	+204bps	-8bps
Poland 10-year	PL10YT=RR	5.4140	0.0570	+235bps	-2bps
FORWARD RATE AGREEMENTS		3x6	6x9	9x12	3M interbank
Czech Rep	CZKFRA, PRIBOR=	4.01	4.14	4.19	3.81
Poland	PLNFRA, WIBOR=	3.82	3.82	3.83	3.82
Note: FRA quotes are for ask prices