Analysts: MNB base rate cuts may be done

In Hungary

One day after announcement of the National Bank of Hungary (MNB) base rate to yet another record low of 2.60%, analysis compiled by Bloomberg suggests that the central bank may be finished with the easing cycle: Expect at most one more cut to 2.50% with national elections looming, say the experts, but a rise in the base rate probably won’t be happening in the short-term, either.

The Bloomberg report notes that in 2014, forint-based securities have dumped 3.8% in value, ranking the country just 30th of 32 nations listed in the news service’s Emerging Market Local Sovereign Index; meanwhile, the 4.7% loss in the forint’s value itself is larger than all but three of 24 emerging-market currencies tracked by Bloomberg. Commented Aegon NV manager Zoltán Szűcs: “The forint is becoming increasingly less worth holding and, in case of potential emerging-market turbulence, may deeply underperform.”

On that note, an MNB statement of earlier this week again reassured that “Hungary’s fundamentals make it more resistant to external shocks than emerging peers…”

And until the election, Standard Bank Group Ltd. strategist Demetrios Efstathiou advises that “policy makers will try to keep financing costs low to show that Fidesz is the party that brought low inflation, and low interest rates.” Efstathiou was further quoted by Bloomberg as declaring rate cutting by the MNB Monetary Council “as good as done” and that no rate hikes would come “any time soon.”

Raiffeisen Bank International AG currency trader Gábor Korompay assured Bloomberg that the government will seek to avoid a “substantial” forint for the time being: “Of course they can’t do much if Russia invades Ukraine and emerging markets slide, but they can control forint-specific risks, at least until the vote. The central bank also doesn’t want to forint to plummet.”


Sharp Rise in Energy Costs Putting Strain on Competitiveness Analysis

Sharp Rise in Energy Costs Putting Strain on Competitiveness

Parl't approves 2023 budget Parliament

Parl't approves 2023 budget

Danubius Hotels Appoints Group Director of Development Appointments

Danubius Hotels Appoints Group Director of Development

3 Downtown Districts Planning to Introduce 30 km/h Speed Lim... City

3 Downtown Districts Planning to Introduce 30 km/h Speed Lim...


Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.