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MNB base rate could fall to as low as 4.5%

Takarékbank Senior Analyst Gergely Suppan said on Wednesday evening that he believes the National Bank of Hungary (MNB) could reduce its base rate to as low as 4.5% from the current mark of 5.75% over the next six to nine months.

Inflation could fall rapidly, to 3.5% from 5% by the end of 2013, and even closer to the 3% central bank target if grain prices drop steadily, he told a business forum in Szekszárd. Suppan said that the MNB is clearly intending to further cut the base rate at its rate-setting session next week. The MNB has reduced key interest by 25 basis points at each of its last five rate-setting sessions. He warned, however, that if the market views András Simor's successor as governor of the MNB to be too close to the government, it will only allow the bank to cut the base rate to 5%. Hungary's president will appoint the next president of the MNB after Simor's mandate expires in March.