Carlin Doyle, an emerging markets strategist at State Street Global Markets in London said „The chances are the central bank will be cutting rates soon,” but „There is still a very strong sense that Hungary is in reform mode.” she added. Hungary’s currency declined against the euro to Ft 249.87, from Ft 249.76 at the end of last week.
The ten-year benchmark yields fell to their lowest in more than a week after touching a three-month high on June 13, as investors added to bets policy makers will cut rates a quarter-point to 7.75% on June 26. Inflation slowed in May, as the government embarks on a program of economic reform, including slashing spending and benefits. The yield on the 6.75% government bond due February 2017 fell 3 basis points to 6.73% by 11:34 a.m. in Budapest.
The yield on the 6% note due October 2011 fell 3 basis points to 6.96%. Expectations for lower rates pushed the forint lower. Annual inflation slowed to 8.5% in May from 8.8% the month before, the Hungarian Statistical Office (KSH) said on June 12. The central bank unexpectedly held rates at 8% at the last meeting on May 22. (bloomberg.com)
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