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Hungary’s Central Bank Likely To Cut Base Rate Next Week

Tamás Székely 2015.04.18.

Analysts polled by Reuters expect the National Bank of Hungary’s (MNB) rate-setting Monetary Council to cut the current 1.95% base rate at a policy meeting on Tuesday. Twenty out of 21 analysts in a survey on Thursday forecast the MNB would lower its base rate by 15 basis points. One analyst projected a 10 basis point cut. “We currently look for back-to-back 15 basis-point rate cuts through May,” Bank of America Merrill Lynch analysts said in a note, adding that in the rest of the year the central bank could adopt a more cautious pace of easing. The analysts polled by Reuters on Thursday expect Hungary’s base rate to drop to 1.5% in the fourth quarter of 2015 before a rebound to 2.25% by the end of next year.

Meanwhile Hungarian economic news portal portfolio.hu said it expected Hungary’s base rate to drop to 1.5% in the fourth quarter of 2015 before a rebound to 2.25% by the end of next year.  Hungarian analysts polled by portfolio.hu agreed that MNB’s decision-makers are on common grounds not only on this matter but also about the end of the easing cycle that was restarted last month after a 24-month rate cut streak was put on hold in July 2014. There is a more meaningful difference in projections only for the end-2016 base rate, the news portal said. “For the time being, we see no reason why the Monetary Council should change the pace of rate cuts”, Erste Bank analyst Gergely Ürmössy told portfolio.hu.

MNB deputy governor Ádám Balog at the start of April told Reuters that the central bank’s new easing cycle would “definitely” consist of several steps, though not necessarily 15bp ones. “At this moment I definitely see a need for a longer easing cycle, taking into account that this (disinflationary risks) is a widespread risk, and at this moment we cannot see which scenario will actually materialise,” Ádám Balog told Reuters in the interview two weeks ago.

 via reuters.com, portfolio.hu, hungarymatters.hu photo: public domain