Analysts: Chances for relaunch of Hungary rate cuts grow

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Some analysts polled by MTI see a growing chance for the National Bank of Hungary (MNB) to restart rate reductions, though not before the beginning of next year.

Worsening business confidence in Europe has a negative effect on the prospects of the Hungarian manufacturing industry, and this could prompt the MNB to prop up domestic economic activity through renewed rate cuts, Ákos Kuti of Equilor Befektetési said.

The latest macro-economic data and market processes point to lower growth and lower inflation which makes the restart of MNB rate cuts possible, Dániel Bebesy, portfolio manager of Budapest Alapkezelő said.

Tamás Pesuth, leading analyst at the research institute Nezőpont Intézet disagreed, however, saying that the low inflationary environment still characterising the Hungarian economy supports efforts to keep the rates on hold.

The MNB Monetary Council wound up an easing cycle started two years earlier in July. It kept the key base rate on hold, at 2.10%, at the last rate-setting meeting held earlier yesterday.

 

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