MNB Could Cut Base Rate to 10-11% - Report

MNB

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Hungary's central bank could cut its base rate to 10-11% by the end of the year from 13%, a rate-setter told news wire Reuters, warning however against big or unexpected moves amid the fallout from a recent larger-than-expected rate cut in Poland.

The National Bank of Hungary (MNB) cut its one-day deposit rate by 100 basis points to 14% last month, continuing to unwind rate hikes now that European Union's highest inflation, which peaked above 25%, is finally slowing down.

Gyula Pleschinger, a policymaker sitting on MNB's Monetary Council, noted that there was a "good chance" the MNB could align its one-day deposit rate with its 13% base rate when it meets on September 26, unwinding all of last October's emergency rate hikes to shore up the forint from record lows.

Once that alignment takes place, the central bank will simplify its policy toolkit further, which could include making the interest rate corridor around its base rate symmetrical, Pleschinger added.

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