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Analysts see Monetary Council raising base rate by 25 bp on Monday

Analysts polled by Reuters expect the central bank's Monetary Council to raise the base rate by 25bp to 6.00% at Monday's rate-setting meeting, predicting that the base rate will remain at this level at the end of this year, according to a Reuters survey.

Most of the 25 analysts polled said the MNB will raise the base rate by 25bp to 6.00% at next Monday's meeting. However, six of the analysts forecast that the bank would keep the base rate on hold at 5.75%.

The median forecast of the analysts sees Hungary's base rate at 6.00% by the end of 2011 as well as at the end of 2012 after the expected rate hike in January. The projections for the 2011-end base rate varied, however, widely, between 5.00% and 6.75%.

The analysts predicted average annual inflation of 3.9% for 2011, and the forecast for twelve-month December inflation was also 3.9%. They upped their forecast for annual average inflation by 0.1 percentage point and their year-end CPI forecast by 0.3 percentage points compared to the previous poll held in December.

The analysts' median for this year's GDP growth is 2.8%, although the predictions vary widely, between 1.0% and 3.2%, and 3.4% GDP growth is predicted for 2012. The annual growth projections were upped sharply from 1.0% and 2.7%, respectively, in December.

The analysts' forecast for the ESA general government deficit is 2.9% of the GDP for 2011 as they did in December. Their projection matches the government's official deficit target of 2.94% of GDP for this year. The forecasts varied in a wide range, between a 3.2% deficit and a 6% surplus, the latter most probably assuming the spending of the bulk of large part of the assets transferred from private pension funds. (MTI – Econews)