MNB easing cycle could continue on stable inflation outlook

The National Bank of Hungary's Monetary Council said members could consider a further reduction in rates if the outlook for inflation is inline with the central bank's mid-term 3% "price stability" target and financial market sentiment is unchanged, according to the condensed minutes – published Wednesday – of a rate-setting meeting on April 23. "In terms of future monetary policy decisions, members agreed that the Council would only consider a further reduction in the policy rate if the medium-term outlook for inflation remained in line with the gank’s 3% target and the improvement in financial market sentiment was sustained," according to the minutes. The Council decided at the April meeting to cut the central bank's key rate by another 25bp – to 4.75% – for the ninth monthly meeting in a row. The decision, which was in line with market expectations, brought the rate to a new historical low. In a statement published after the meeting, the Council said "further reductions in the key rate could be made if the mid-term inflationary outlook remains in line with the 3% target and favourable financial market trends persist".