Hungary’s central bank unexpectedly cuts base rate to 1.2%

Interview

Jessica Fejos

The Monetary Policy Council of the National Bank of Hungary (MNB) surprised analysts today by announcing that it would cut the central bank’s base rate by 15 basis points to 1.2% for the first time since last summer’s easing period.

Saying they did not expect this cut, analysts at Equilor reportedly added today that MNB could keep easing by 10-15% bps, down to around 1% by fall. 

Since announcing the end of an easing cycle in June, the central bank kept the base rate on hold at 1.35%. But following a meeting in February, the Monetary Policy Council said further easing was possible in view of the low inflation rate, according to reports.

After the announcement of the rate cut, the forint weakened on the interbank market, MTI said. Before the meeting the forint was trading around 311.34 to the euro, after the meeting it jumped to 313.13, while it moved against the dollar from 277.40 to 278.98 and against the Swiss franc from 285.84 to 287.28, MTI said.

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