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MNB continues easing, cuts 15 bp

Analysis

The rate-setting Monetary Council of the National Bank of Hungary (MNB) decided at a policy meeting today to cut the central bankʼs main rate by 15 bp to 1.65%, as earlier expected.

The scale of the cut was the same as at the previous policy meeting one month earlier. After that decision, the Council judged that the "outlook for inflation and the cyclical position of the real economy pointed in the direction of a reduction in the policy rate and loose monetary conditions for an extended period".

The National Bank of Hungary started easing on March 24, cutting the base rate from 2.10% to 1.95%, which caused no surprises to the market. Ever since the MNB has been easing by 15 basis points per step.

Analysts at Equilor expect another cut of 15 bp after June 23, which will result in a base rate of 1.50%, the same as in Poland. According to Equilor the MNB said that careful cuts could continue until it supports reaching mid-term inflationary aims.

Equilor expects the central bank to wait during the summer and see how the global economy advances before changing the rates again.

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