* Hungary, Romania CPI rise in Nov, Slovak CPI at record low
* Hungary, Romania seen easing in 2010, unlike neighbours
* Romania rates seen on hold for now due to politics
* Czech current account shows surplus, defies expectations
By Luiza Ilie
BUCHAREST, Dec 11 (Reuters) - Inflation picked up quicker
than forecast in Hungary and Romania on higher fuel and food
costs in November, but analysts said they still expected rate
cuts next week out of Budapest and later on in Bucharest.
Price growth has fallen steadily across eastern Europe in
recent months as high unemployment and tight credit hit
consumption but is now ticking up on commodity prices, even
though a patchy recovery is squeezing domestic demand.
But analysts said price growth would wield little sway over
Romanian and Hungarian interest rates compared with currency
concerns and, in the case of Romania, a political deadlock that
has already delayed vital foreign aid.
Hungary's annual headline inflation rate <HUCPIY=ECI> picked
up to 5.2 percent, from 4.7 percent in October, above analysts'
median forecast of 5 percent.
Romanian inflation <ROCPI=ECI> exceeded market expectations,
rising to 4.7 percent in November, from 4.3 percent in October.
"At the moment, inflation isn't the primary driver of
interest rates," said Capital Economics' David Oxley.
"Hungary and Romania are still stuck in easing mode.
Hungary, like Romania has to keep an eye on what happens on
currency markets."
After the data release, Hungarian central banker Andras
Simor said the pace of interest rate cuts will depend on risk
appetite in global and domestic markets in the near future.
[].
Hungary's central bank has cut its main lending rate <NBHI>
by a combined 300 basis points in five steps since July to 6.5
percent. The bank will hold its next meeting on Dec. 21.
While analysts expect Romania's central bank to slash its
benchmark rate over the course of next year -- at 8 percent it
is the highest in the European Union -- they say it will likely
hold fire at its next meeting on Jan. 5.
Romania paused in a 225 basis points rate easing cycle aimed
at alleviating a painful recession, after a political crisis
toppled a centrist minority government in October and suspended
aid tranches from the IMF.
The leu <EURRON=> showed little reaction to the data
release, while the Hungarian forint <EURHUF=> was holding on
firmer ground.
EASING AHEAD
Oxley said he expected Romanian and Hungarian rates to fall
to 6 and 5.5 percent, respectively, at the end of 2010, while
Poland and the Czech Republic had probably reached the end of
their easing cycles. Other analysts supported his view.
"The figure supports our expectation of further (Hungarian)
rate cuts this year, with the easing continuing at a cautious
pace in 2010 as well," said Gyorgy Barta, from CIB in Budapest.
Analysts have said Romania high interest rates are stifling
economic recovery. Once a major vulnerability, its current
account deficit shrank 72.2 percent on the year to 3.95 billion
euros in January-October. []. Its economy is
expected to contract by up to 8 percent this year.
But a months-long political crisis that has continued after
Sunday's presidential election will prompt the central bank to
stay put at least until the crisis is resolved with the
installation of a new government.
A cabinet, which must be appointed by the president and
clear parliament, is key to the International Monetary Fund's
demand that Bucharest pass a cost-cutting 2010 budget to unlock
its stalled 20 billion euro ($29.45 billion) aid deal.
"The central bank will resume rate cuts once there is
political stability," said Volksbank's Melania Hancila.
Meanwhile, Slovakia, which joined the euro zone on Jan. 1,
saw its annual inflation remain at an all-time low of 0.4
percent in November. It recorded a foreign trade surplus of
225.3 million euro in October.
The Czech current account showed a 12.41 billion crown
($709.5 million) surplus in October, defying market expectations
for an 11.0 billion crown deficit, as exports stabilised while
imports continued to fall due to weak domestic demand.
(Reporting by Reuters bureaus; Editing by Andy Bruce)
