In a research note released to clients in London, Commerzbank said that their cyclically-based forecast is for Hungarian GDP growth to decelerate to 2.2% this year. Additionally, “we forecast core inflation to moderate further … We expect the MNB to lower inflation projections noticeably in March”.
At the EU level, “we expect the ECB to revise down inflation forecasts sharply in March, which will clear the way for further monetary expansion”.
Against this backdrop, “we expect the MNB to cut its benchmark rate from 1.35% to 1%”.
At present, the MPC has stated that the policy rate will be left unchanged for a protracted period. However, “we question why the MNB would not cut rates to maintain the current level of real interest rate after it too has lowered inflation projections”, Commerzbankʼs analysts said.
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