K&H: 2% inflation expected; beware of bonds

Analysis

The trend of depressed prices in Hungary will reverse by the end of the year, and inflation will reach 1.5-2%, according to projections published by K&H today.

Analysts at K&H said the central bank's cut in the base lending rate this week significantly affects the market for savings in Hungary, so that, together with expected inflation, investors might face negative real interest rates.

“We suggest investors seek protected funds over bond investments, to reach higher yields while preserving the principle invested, even in the case of an unexpected drop in interest rates,” said István Horváth, the managing director of funds for K&H.

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