(Updates after Polish rate hike) By Krisztina Than and Gergely Szakacs BUDAPEST, October 6 (Reuters) – The zloty jumped more than 1% to a three-week high against the euro after the National Bank of Poland unexpectedly raised interest rates, joining its powerhouse European peers are tightening monetary policy to counter mounting inflationary pressures. At 13:44 GMT, the zloty was 1.4% stronger than the euro, with the surprise 40 basis point increase in its benchmark rate by the NBP to 0.5% reversing its initial losses and immediately tilting the Polish currency in the dark for 2021. Analysts in a Reuters poll expected rates to remain unchanged on Wednesday. Most economists didn’t expect the NBP to start raising rates until Q1 2022. rhetoric from previous months or have completely changed their point of view, ”said Piotr Bielski, head of research at Santander Bank Polska. “The key question is whether this signals further gradual increases or if there will be a pause after this rise, not a small one after all,” he said. “I guess, though, it’s the latter, we’re raising rates dramatically, and then we’ll see how the situation is.” The Polish index of banking stocks gained up to 4.2%. Other central European currencies and stocks mostly fell on Wednesday as global sentiment deteriorated with higher oil prices fueling inflation concerns. Amid a strong recovery, consumers in Central Europe face one of the highest inflation rates in the European Union, leading to interest rate hikes in the Czech Republic and Hungary since June, including the largest increase by the Czech central bank in 24 years. Romania’s central bank also raised rates on Tuesday. The Hungarian forint was down 0.3%, reducing its initial losses, while the Czech crown was 0.2% weaker. Both units had been supported by the tightening of the position of their central banks. However, the forint retreated after gains that started on Friday when deputy central bank governor Barnabas Virag signaled a further rate hike of 15 basis points. “The decline in the forint is likely due to a rise in underlying yields, we had seen the forint weaken as global yields rise,” said a trader in Budapest, adding that although the central bank’s promise to continued tightening supported the forint, that faded amid the global gloom on Wednesday. The leu remained stable, but some analysts said it could resume its fall in uncertainty after Romania’s parliament overthrew the minority government of Prime Minister Florin Citu, which had been formed for nine months. CEE SNAPSHO AT MARKETS T 1544 CET CURRENC IES Last daily variation of offer closing in 2021 EURCZK Czech EURHUF Hungary 0 0 EURPLN Polish EURRON Romanian EURHRK Croatian EURRSD Serbian 0 0 Note: calculated from 1800 daily variation CET Last daily variation of closing in 2021 .PX Prague 1363.34 1362.32 + 0.07% +32.73 00% .BUX Budapest 53236.7 53369.7 -0.25% +26.43 1 8% .WIG20 Warsaw <.wig20> % .BETI Bucares 12,630.0 12,613.4 + 0.13% +28.80 t 9 3% .SBITO Ljubljan <.sbito p a> % .CRBEX Zagreb <.crbex> % .BELEX Belgrade <.belex> .SOFIX Sofia <.sofix> % Yield Yield Spread Daily variation (bid) vs Bund variation of Czech spread Republic CZ2YT = 2 years CZ5YT = 5 years CZ10YT s Poland PL2YT = 2 years s PL5YT = 5 years s PL10YT s FORWARD 3×6 6×9 9×12 3M interbank Czech Hungary Poland ** ****************************** ****************** (Reporting by Krisztina Than and Gergely Szakacs, additional reporting by Jason Hovet in Prague; Editing by Kim Coghill and Emelia Sithole-Matarise)