MNB expected to keep rates on hold at Tues meeting

EU

The National Bank of Hungary's Monetary Council is expected to keep the central bank's key rate on hold at a meeting on April 24, according to a poll of analysts by Reuters.

All 24 analysts in the monthly poll by Reuters said the MNB would keep the base rate on hold at 7% for the fourth month in a row next Tuesday.

In a statement published after a rate-setting meeting in March, the Council said high volatility of risk perceptions and underlying inflation continued to "warrant a cautious policy stance".

The minute of the meeting, published later, noted a "broad consensus" among members that alternative risk scenarios present "real and relevant risks" but none of these warranted a shift in interest rate policy away from the baseline scenario in the short term.

"The deteriorating outlook for inflation and increased perceptions of risks warranted greater caution in monetary policy and consistent interest rate policy decision-making for the months to come," according to the minutes.

The median forecasts in the Reuters poll show the base rate dropping to 6.5% by the end of 2012 and to 6% by the end of 2013. However, analysts said the rate cuts were conditional on the successful conclusion of talks on precautionary financial assistance Hungary is seeking from the International Monetary Fund and the European Union.

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