Goldman Sachs: MNB could cut back on its aggressive easing tactics

Food

Investment banking firm Goldman Sachs said yesterday it is not convinced that Hungaryʼs central bank will slash the interest rate as much as some are expecting.  Price declines likely bottomed out in February, and the relatively strong forint currency could reverse some of the annual inflation declines for April and May, the investment bank said in a note yesterday.

Goldman Sachs analysts say that food and energy price declines will start to wane and inflation will return to positive territory by the end of the third quarter, and that it will then accelerate quickly at the very end of the year. Goldman Sachs sees Hungaryʼs central bank lowering its key rate to about 1.6% in 2015 versus the current 1.95%. "We think that expectations of a turnaround in inflation and solid growth will reduce the National Bank of Hungaryʼs appetite for more aggressive easing," the bank said.

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