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Analysts expect further easing at MNB policy meeting

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Analysts expect the National Bank of Hungaryʼs Monetary Council to reduce the central bankʼs key rate by 20 bp to 1.90% at a policy meeting tomorrow, Hungarian news agency MTI reported today.

ING chief analyst András Balatoni said low inflationary pressure would probably prompt the 20 bp cut, which could be followed by further easing over three months, bringing the base rate to 1.50% by July.

K&H senior analyst Dávid Németh said fresh data on GDP, retail sales, wages and employment were all favorable, and inflation was still under the mid-term target. The forint is also at its strongest level since 2014, he added.

Németh projected a 20 bp cut on Tuesday to be followed by further, cautious easing.

At the last policy meeting, on February 24, the Monetary Council acknowledged that risks pointing in the direction of a lower base rate had increased, but agreed to decide on any possible rate change only after reviewing the central bankʼs next Inflation Report.

The Council is scheduled to discuss the final version of the MNBʼs fresh Inflation Report at the policy meeting on March 24.

After a rate-setting meeting last July, the Council said it had wound up an easing cycle begun almost two years earlier.

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