MNB expected to reduce base rate to below 1.5%

Analysis

Hungaryʼs central bank is set to continue its recently re-launched easing cycle with a 15 bp cut this week and its policy rate may bottom out well below 1.5% later this year, London-based emerging markets economists said ahead of the Monetary Policy Councilʼs rates decision, due today, state news agency MTI reported. 

Analysts at JP Morgan said yesterday they expect another 15 bp rate cut today, taking the policy rate to 1.80%.  Although the inflation and activity data broadly track the MNBʼs latest forecast and "thus do not call for a reassessment of our rate call (of the) policy rate down to 1.5%-1.6% by June, the risk is that sustained forint appreciation prompts the MNB to continue the easing cycle into the third quarter of 2015", they added.

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