MNB opts for larger-than-expected 15 bp base rate cut

Analysis

As promised, the National Bank of Hungary (MNB) announced its new key rate at 2pm CET today. Somewhat unexpectedly, the Monetary Policy Council announced a 15 bp cut to 2.70%.

In Reuters’ monthly poll of economists and analysts on the rate, 16 of 22 had anticipated a 10 bp cut to 2.75% in line with most experts’ predictions.

MNB monetary policy director Dániel Palotai had hinted that a cut smaller than January’s 15 bp reduction might be in store last week, stating that “in an environment where the economy is performing below its potential and inflation pressure is moderate, achieving price stability in the medium term requires monetary conditions that support the real economy” and that the adjusted reality would be considered in today’s MPC meeting.  

And after the Central Statistics Office (KSH) had announced consumer price inflation of 0% for Hungary for January, Takarékbank senior analyst Gergely Suppan opined to national news service MTI that “the forint’s volatility and a deterioration of risk assessment could narrow the opportunity for the National Bank of Hungary (MNB) to lower its base rate further.”

Not this month, it seems…

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