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Reuters Poll: MNB likely to cut base rate by 15 basis points

Food

Jessica Fejos

The National Bank of Hungary (MNB) could cut its base rate by 15 basis points at its April 26 meeting and cut it further in the coming months, according to a Reuters poll conducted between April 18-20, Hungarian news agency MTI reported today.

(Photo: Jessica Fejos)

Out of the 21 analysts surveyed, 19 projected a 15 basis point reduction to 1.05% in the 1.2% base rate next week, and two analysts forecast a 10 basis point cut, MTI said.

According to the median forecasts, the base rate could bottom out at 0.75% in the coming months, remain at that level throughout the year and rise to 0.9% by the end of next year, MTI noted.

Hungaryʼs central bank lowered its main interest rate in March by 15 basis points, resuming the rate cuts it ended in July 2015.

It also flagged further easing measures including rate cuts and its deputy governor Márton Nagy said a weaker forint would support exporters and help “desired inflation” return, according to the news agency.

“The exchange rate will absolutely remain a key factor... as long as the forint stays at 310 or firmer, the bank can cut rates further,” Gergely Szabó Fórián, portfolio manager of Pioneer Investments reportedly said.

“A change in the international inflation environment, a reversal in the commodities price decline could also bring forward the end of the rate cuts,” Fórián added.

The analysts forecast a pick-up in inflation to 1.6% by December of this year, 2.4% by the end of 2017 and 2.65% by the end of 2018, the news agency added.

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