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Gyurcsány, Járai, analysts on further rate cuts

Lowering the benchmark interest rate of the National Bank of Hungary (MNB) to 8% would still ensure a neat income for foreign investors, Prime Minister Ferenc Gyurcsány said in a public radio interview this morning. The statement follows a warning by National Bank of Hungary (MNB) President Zsigmond Járai, who deemed that with the yesterday?s 50 basis point rate cut the base rate has reached a level where further rate cuts require extra caution, declining to state whether Hungary?s fundamentals would allow another rate cut in February.
Several analysts concurred in the opinion that Feb. 21?s meeting of MNB?s Monetary Council will see a further rate cut. A forecast by Citibank Rt?s concludes that ?the favorable outlook for inflation over the next few months should allow rates to fall to about 8% before rising political noise in H2 limits the room for further cuts?, referring to the upcoming elections in 2006. Raiffeisen Bank Rt?s senior analyst Zoltán Török also said he was expecting the February?s inflation report to be lower than the previous ones, after which the inflation rate will remain stable in his opinion. This substantiates expectations of a rate cut of 50 basis points on Feb. 21 and by a further 50 basis points later in H1, he said.
Prime Minister Ferenc Gyurcsány has not yet chosen the four new members to the Monetary Council as authorized by a controversial act of Parliament at the turn of the year.