(Updates with Hungary cenbank comments, forint reaction) By Anita Komuves BUDAPEST Oct 1 (Reuters) – The Hungarian forint strengthened on Friday, recouping some of its recent losses after Deputy Governor Barnabas Virag flagged for further hikes in base 15 point rate over the next month as inflationary pressures continue to rise. The forint gained around half a percent shortly after Virag’s remarks before retreating, and was up 0.25% on the day and was trading at 358.30 per euro at 12:30 GMT. “The sharp rise in Czech rates and the growing possibility of a tightening in Poland seemed to weaken the forint’s rate advantage,” said an FX trader in Budapest. “But Virag’s words about further rate hikes have helped the currency.” Virag said the tightening cycle, which began in June, will continue as long as the inflation outlook warrants. Yields on government bonds on the long end of the curve rose after Virag’s remarks, two Budapest fixed-income traders said. The 10-year bond yield rose about 9 basis points to 3.36%. The Polish zloty gained 0.6% and was trading at 4.5822 per euro, as higher-than-expected CPI data fueled expectations for rate hikes in the country which has so far resisted a race to tighten it, wary of thwarting an economic recovery. The currency extended its gains from Thursday when it surged following the release of the minutes of the last central bank meeting, which the market interpreted as showing a greater chance of a rate hike. The Czech koruna also added to its gains from the previous session when it soared after the central bank announced a 75 basis point higher than expected rate hike to 1.50% and said more would come because it was aimed at preventing inflation. Polish CPI Flash data released on Friday showed prices rose 5.8% year-on-year in September, above expectations. “The prices are going crazy and it seems that eventually the Monetary Policy Council (MPC) will have to admit that inflation is also determined by demand,” said Marcin Luzinski, economist at Santander Bank Poland. “I think the first interest rate hikes will take place in November, if not later than early next year.” Polish rate regulator Lukasz Hardt said on Friday that Poland urgently needed to raise interest rates by 15 basis points to cope with rising inflation. The crown strengthened 0.19% on the day and traded at 25.301 per euro, nearly 0.9% higher than before the rate hike. Higher inflation data persuaded the bank to take further action in September, Citi wrote in a note. “This means that September’s larger hike is not necessarily the tightening up front that would dampen tightening momentum going forward.” The EEC region’s PMI data, also released on Friday, showed a slowing in the pace of the recovery with global shortages and rising costs further restraining output growth and slowing the pace of an economic rebound. CEE SNAPSHO AT MARKETS T 1430 CET CURRENC IES Last daily change previous offer closing change in 2021 EURCZK = Czech EURHUF = Hungary 0 EURPLN = Polish EURRON = Romania EURHRK = Croatia EURRSD = Serbian 0 Note: calculated from 1800 change daily CET Last previous daily change near change in 2021 .PX Prague 1329.32 1324.880 +0.34% +29.42 0% .BUX Budapes 53269.0 52854.65 + 0.78% +26.51 t 4 % .WIG20 Warsaw 2329.70 2310.29 + 0.84% ​​+ 17.43% .BETI Buchare 12,590.2 12,645.10 -0.43% +28.40 st 9% .SBITOP Ljublja <.sbitop na> % .CRBEX Zagreb 2023.50 1999.24 +1.21% + 16.34% .BELEX1 Belgrad <.belex1 e> .SOFIX Sofia 584.64 585.36 -0.12% + 30.64% Yield Yield Spread Daily variation (bid) vs Bund variation of the Czech spread Republished CZ2YT = R s CZ5YT = R s CZ10YT = s Poland PL2YT = R s PL5YT = R s PL10YT = s FORWARD 3×6 6×9 9×12 3M Czech interbank 2.63 2.90 3.12 1.24 Republic of Hungary 2.31 2.56 2.75 1.76 Poland 0.68 1, 05 1.35 0.23 ******************************************* ******* ********** (Additional reporting by Jason Hovet in Prague and Alicja Ptak in Warsaw Editing by Raissa Kasolowsky and KRishna Chandra Eluri)