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CEE MARKETS-Zloty rebounds, central bank sees neither cut nor hike

* Polish central bank cuts CPI forecasts, holds fire as expected * NBP seen maintaining bias despite planned fiscal spending rise * Budapest leads equities rise, OTP Bank shares retest record high * Romanian stocks retreat from 2-and-1/2-month high (Recasts with Polish central bank decision and comments, rise in the crown and Hungarian blue chip stocks) By Sandor Peto BUDAPEST, March 6 (Reuters) - The zloty regained ground on Wednesday as the Polish central bank (NBP) slashed its inflation forecasts at its monthly meeting, keeping interest rates on hold as expected.

The bank cut its inflation forecast for this year to 1.2-2.2 percent, but its projection for 2020 included a small risk of overshooting its target range of 1.5-3.5 percent.

Its governor, Adam Glapinski said there was no need to cut interest rates, while a government spending rise announced late last month did not increase the probability of rate hikes either.

He repeated his view that rates may remain unchanged until 2022. But rate-setter Lukasz Hardt did not rule out a change in rates and said the fiscal measures would have a significant effect on the economy.

The zloty traded flat at 4.298 versus the euro at 1612 GMT, off the day's low of 4.302, but near the 4.3 psychological line and its 200-day moving average.

Polish government bond yields dropped 2-3 basis points, tracking Bunds, with the 10-year paper trading at 2.8275 percent.

The NBP's comments did not signal a shift in the banks' earlier views, analysts said.

Warsaw-based Erste analyst Katarzyna Rzentarzewska said the group retained its 1.7 percent inflation forecast for Poland for 2019, and there was some upside risk to their 3.8 percent economic growth projection.

"We expect rates to remain stable this and next year," she added.

Other currencies in the region -- the Czech crown, the forint and the leu -- firmed by about 0.1 percent versus the euro, helped by some weakening of the dollar.

The crown set a 6-week high, and the forint , trading at 315.35 against the euro, approached 9-1/2 month highs at 315.

The Hungarian central bank is expected to start to tighten liquidity in forint markets late this month, and the Czech central bank to continue to increase interest rates this year.

Budapest led a rise in equity indexes in the region, driven by oil group MOL and OTP Bank with the latter re-testing Tuesday's record lows at 12,050 forints.

Rollercoaster trading in the shares of Banca Transilvania , Romania's biggest lender, led Bucharest's main index into a retreat from a 2-1/2 month high.

Romanian stocks were helped this week by hopes for changes in controversial new taxes on banks and energy firms, which were announced in December.

President Klaus Iohannis said on Wednesday he would send a 2019 budget plan containing "false numbers" back to parliament for re-examination, after the Constitutional Court rejected a challenge he brought to the spending proposal.

CEE SNAPSHOT AT MARKETS 1712 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech Hungary Polish Romanian Croatian Serbian Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1080.53 1076.630 +0.36% +9.53% 0 Budapest 41086.90 40718.50 +0.90% +4.98% Warsaw 2327.16 2321.32 +0.25% +2.22% Bucharest 7917.90 7914.44 +0.04% +7.24% Ljubljana <.SBITOP 865.47 856.60 +1.04% +7.61% > Zagreb 1766.70 1767.18 -0.03% +1.02% Belgrade <.BELEX1 697.65 694.07 +0.52% -8.41% 5> Sofia 583.00 582.98 +0.00% -1.93% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year 5-year 10-year Poland 2-year 5-year 10-year FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.25 2.31 2.34 2.03 (PRIBOR= ) Hungary 0.42 0.63 0.83 0.15 Poland 1.74 1.73 1.74 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Additional reporting by Luiza Ilie in Bucharest and Alicja Ptak in Warsaw; Editingb Ken Ferris)