UPDATE 1-CEE MARKETS-Forint roller-coasters as central bank flags 'proactive tightening'

 (Recasts with Hungarian central bank decision)
    By Anita Komuves
    BUDAPEST, May 25 (Reuters) - The Hungarian forint initially
firmed but then gave up its gains on Tuesday, after the central
bank left interest rates unchanged and reiterated that it was
ready to "proactively tighten" policy to address inflation
    The bank said inflation was likely to be volatile in the
coming months, adding that its bond purchase programme remained
a "crucial" policy tool.  
    The forint was down 0.26% on the day, trading at
348.50 per euro, retreating to levels seen in the morning after
briefly firming past 348. 
    "The word 'proactive' made a few forint bulls enthusiastic
and that suddenly strengthened the currency but then it turned
back from 347.60," a Budapest-based FX trader said.
    The currency was still trading at nine-month highs that it
hit last week after deputy governor Barnabas Virag flagged a
possible base rate hike in June.
    Since Virag's announcement last Monday, the forint has
strengthened to levels last seen in August 2020, firming past
the psychologically important level of 350 per euro.
    Government bond yields were broadly stable after the NBH's
rate decision and statement, two fixed-income traders said. 
    "Trade volume is low, yields are not moving as the market is
uncertain because the central bank did not comment on how much
it would hike rates and how many times," an FI trader said.
    The central bank said on Tuesday that the June inflation
report would be key to assessing the inflation outlook,
confirming that the bank could be on course towards rate
tightening next month. 
    That would make Hungary the first EU country to start
raising interest rates as the economy recovers from the
    Elsewhere, currencies slid but kept hovering around strong
levels they recently hit on rate hike expectations. 
    The Czech crown eased 0.07% to 25.440 and was
trading around its strongest levels since March 2020 as markets
see chances of a rate hike coming sooner rather than later.   
    The Polish zloty was stable and trading on the
stronger side of the psychological level of 4.5 per euro marked
last week.
    Prague stocks were up 0.95%, touching a fresh nearly
10-year high. Warsaw was 0.32% stronger, Budapest
 slid 1.21% and Bucharest slipped 0.69%.
                   CEE       SNAPSHO   AT                       
                   MARKETS   T        1551 CET           
                             Latest   Previous  Daily    Change
                             bid      close     change   in 2021
 EURCZK=  Czech    <EURCZK=  25.4400   25.4230   -0.07%   +3.10%
          crown    >                                     
 EURHUF=  Hungary  <EURHUF=  348.500  347.5800   -0.26%   +4.08%
          forint   >               0                     
 EURPLN=  Polish   <EURPLN=   4.4823    4.4815   -0.02%   +1.72%
          zloty    >                                     
 EURRON=  Romania  <EURRON=   4.9240    4.9260   +0.04%   -1.20%
          n leu    >                                     
 EURHRK=  Croatia  <EURHRK=   7.5130    7.5040   -0.12%   +0.46%
          n kuna   >                                     
 EURRSD=  Serbian  <EURRSD=  117.590  117.5800   -0.01%   -0.02%
          dinar    >               0                     
          Note:    calculated from              1800            
          daily                                 CET      
          change Latest   Previous  Daily    Change
                                      close     change   in 2021
 .PX      Prague             1170.32  1159.340   +0.95%   +13.94
                                             0                 %
 .BUX     Budapes            45836.4  46396.87   -1.21%   +8.86%
          t                        0                     
 .WIG20   Warsaw             2140.91   2134.18   +0.32%   +7.91%
 .BETI    Buchare            11649.5  11730.52   -0.69%   +18.80
          st                       0                           %
 .SBITOP  Ljublja  <.SBITOP  1136.56   1131.32   +0.46%   +26.17
          na       >                                           %
 .CRBEX   Zagreb             1936.76   1940.65   -0.20%   +11.35
 .BELEX1  Belgrad  <.BELEX1   779.24    782.83   -0.46%   +4.09%
 5        e        5>                                    
 .SOFIX   Sofia               531.84    534.08   -0.42%   +18.84
                             Yield    Yield     Spread   Daily
                             (bid)    change    vs Bund  change
          Czech                                          spread
 CZ2YT=R           <CZ2YT=R   0.5680   -0.0310   +122bp    -3bps
 R        2-year   R>                                 s  
 CZ5YT=R           <CZ5YT=R   1.4920   -0.0380   +204bp    -2bps
 R        5-year   R>                                 s  
 CZ10YT=           <CZ10YT=   1.7690   -0.0460   +194bp    -2bps
 RR       10-year  RR>                                s  
 PL2YT=R           <PL2YT=R   0.1750    0.0110   +083bp    +1bps
 R        2-year   R>                                 s  
 PL5YT=R           <PL5YT=R   1.1780   -0.0200   +173bp    +0bps
 R        5-year   R>                                 s  
 PL10YT=           <PL10YT=   1.7960   -0.0280   +196bp    +0bps
 RR       10-year  RR>                                s  
                             3x6      6x9       9x12     3M
          Czech                 0.69      0.95     1.31     0.36
          Rep      <PRIBOR=                              
          Hungary               1.21      1.43     1.59     0.91
          Poland                0.34      0.51     0.68     0.21
          Note:    are for ask                                  
          FRA      prices                                
 (Additional reporting by Jason Hovet in Prague; editing by
Philippa Fletcher and Subhranshu Sahu)