BUDAPEST/WARSAW: The zloty eased against the euro on Wednesday and hit a 16-month low against the forint as concerns about an economic slowdown in Europe offset data showing strong growth in Polish industrial output.

Polish output grew by 6.1 percent in annual terms in January, contrasting with a gloomy PMI manufacturing activity survey for the same month released earlier.

The zloty eased to its weakest levels against the euro since October at 4.3455 and was down 0.2 percent at 4.342 at 1408 GMT.

In its cross with the Hungarian forint it touched its weakest level since October 2017, bid at 72.9282.

While this week's Polish economic data did not change expectations for its central bank interest rates to stay low, possibly for years, Hungary's central bank could start to tighten its policy in the coming months.

Among the key factors weighing on Central European currencies is the region's dependence on euro zone growth, which is now slowing, Bank of America-Merrill Lynch analysts said.

"(Interest rate) hikes largely played out in both CZK rates and FX, and they may well never happen in Poland," the analysts said in a note, adding that Hungary was an exception, with its central bank "turning hawkish despite the global dovish turn".

"PLN/HUF started moving lower, and the forint may continue stronger once the NBH moves in March," they said.

Societe Generale analyst Marek Drimal said that it could make sense to initiate a hedge trade in the region in case the United States imposes tariffs on car imports from Europe.

"In our view, Hungary and the Czech Republic would be the hardest hit, with Hungary looking more vulnerable in FX on a tactical basis," he said, adding that tariffs could also "delay, pause or slow" monetary policy tightening in Hungary.

Hungarian government bonds joined a decline in yields ahead of the publication of minutes from the US Federal Reserve's latest meeting.

The country's 10-year yield was fixed lower by 6 basis points at 2.67 percent, while Poland's corresponding yield dropped 2 basis points to 2.64 percent.

The Czech five-year yield dropped to 1.718 percent from Tuesday's two-month high at 1.759 percent despite a senior finance ministry official saying that a shortfall in tax revenue could widen the budget deficit this year.

Romanian bonds bucked the trend, with the five-year yield bid higher by 6 basis points at 4.31 percent while the leu set a three-week low against the euro.