CEE MARKETS-Zloty stays positive after Polish central bank cuts benchmark rate

WARSAW, March 4 (Reuters) - The Polish zloty held onto its gains after the country's central bank went ahead with an interest rate cut on Wednesday, the probability of which was increasingly in question amid the developing conflict after the Israeli and U.S. attack on Iran.

Earlier on Wednesday, hints from U.S. President Donald Trump at securing transit for oil tankers in the Persian Gulf took some pressure off energy worries and gave Central Eastern European currencies a breather after a sharp sell-off earlier this week.

Poland's central bank cut its main interest rate PLINTR=ECI by 25 basis points to 3.75% on Wednesday, with analysts pointing at stable inflation but noting that the conflict in the Middle East introduced a new element of uncertainty.

The zloty EURPLN= was up 0.5% against the euro to 4.27 at 1421 GMT, after it hit a more than 10-month low on Tuesday.

On Tuesday, President Donald Trump said the U.S. Navy could begin escorting oil tankers through the Strait of Hormuz, a crucial oil shipping lane in the Middle East, if necessary. He added that he had taken steps to secure political risk insurance and financial guarantees for maritime trade in the Gulf.

Analysts, who had previously almost unanimously expected the 25 bps rate cut in a Reuters poll that closed on Monday, had begun turning increasingly open to the possibility of the bank holding its key rate at 4% citing risks. The bank cut rates by 175 basis points last year.

"We assume that the (NBP) governor's comments will be cautious and the (Monetary Policy) Council will take a more hawkish stance as it monitors developments in Iran," ING Bank Slaski analysts wrote on X. The NBP governor is scheduled to hold a press conference on Thursday.

Polish Forward Rate Agreement PLNFRA levels edged lower after earlier rising around 20-30 basis points from last week.

Earlier on Wednesday, a Warsaw-based currency trader said the interest rate decision was secondary to global developments.

"Honestly, the markets aren't paying much attention to it now... the Middle East is the main story," the trader said.

"I think that after Trump said, and these are just words, but he said he would guarantee insurance for these tankers and protect them, the markets recovered somewhat... We'll see if there's a second wave of panic. The night is still young, and this is only just getting started."

In Hungary, the forint EURHUF= continued to trade 0.1% higher at 386.15 per euro, after suffering its biggest slump in two years to as low as 391.55 on Tuesday.

Analysts noted Hungary's higher exposure to energy shocks, compared with other countries in the region.

"On the one hand, as Hungary is a major energy importer, the surge in the price of gas clearly has a negative effect on the forint's performance," MBH Bank said in a comment this morning.

"Another important reason is that in recent months investors have quickly begun to unwind their forint positions, built up due to high interest rates, in this risky environment."

Elsewhere, the Czech crown EURCZK= gained 0.25% against the euro to 24.3550, settling after it hit a nearly six-month low of 24.444 in previous session.

Preliminary data released on Wednesday showed Czech inflation eased deeper below the central bank's target in February, with the headline rate falling to a more than nine-month low of 1.4% year-on-year on the back of slowing food price growth and lower energy costs.

Fallout from Iran strikes could limit room for Czech rate easing, Czech central bank Vice-Governor Jan Frait said in comments published on Wednesday.