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Reuters poll: Analysts expect central bank to keep base rate on hold

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Image by Jessica Fejos

Analysts polled by Reuters expect the National Bank of Hungaryʼs (MNB) rate-setting Monetary Council to keep the current 1.35% base rate on hold at its meeting on August 25 in spite of the slowdown in economic growth in the second quarter, Hungarian news agency MTI reported late yesterday.

(Photo: Jessica Fejos)

All 19 analysts surveyed between August 13 and 17 forecast that the MNB would keep its base rate on hold.

The Monetary Council cut its benchmark rate by 15 points to a historic low of 1.35% at its July policy meeting, putting an end to its easing cycle. The central bank then indicated that the resulting interest rate was consistent with its inflation target of 3% plus/minus one percentage point and would therefore stay on hold for a long time.

Twelve-month CPI was 0.4% in July in Hungary. The consensus of the analysts polled by Reuters suggests it could rise to 2.4% in 2016 and 2.5% in 2017.

Data released since the last rate-setting meeting show that economic growth in the second quarter slowed to 2.7% from 3.5% in the first quarter, below expectations.

This, however, will not prompt the central bank to review its promise on rates, the analysts said, adding that the slowdown may have been caused by a weaker harvest, which the bank cannot influence.

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