MNB deputy governor: Easing “not a done deal”


National Bank of Hungary (MNB) deputy governor Ádám Balog spoke with Reuters yesterday on the easing cycle in which the Hungarian economy is operating, stating that the MNB could cut interest rates to 2.5%. Balog also commented that while the pace of easing could slow up, “this is not a done deal.”

Balog said that Hungary’s vulnerability to external market forces has “decreased markedly” since mid-2012 when base rate cuts began. “I believe that based on Hungarian inflation expectations, and our inflation forecasts,” said Balog, “there is room for a further reduction in interest rates, which could go as low as 2.5%.”

London analysts: Key rate could go to 2.1%
Hungary’s central bank is likely to end its ongoing monetary easing cycle at a terminal policy rate of just above 2%, economists with London-based BofA Merrill Lynch Global Research postulated yesterday as part of a report on the country.

The report concluded in part that “We cut our forecast for the policy rate to 2.25% by May, expecting the Monetary Policy Council [MPC] to shift to 15 bp monthly cuts (though 10 bp per month is also a possibility).”

The Merrill Lynch group also made note of the new conditions on the central bank’s Funding For Growth scheme: “we originally thought the MPC would actively use to stimulate borrowing quickly, [but] the experience of the last few months shows the Council is keen to [reserve this] for higher credit quality SME borrowers, largely for new investment.”

-- material from MTI was used in this article


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