Hungary Set to Resume Rate Cuts This Month, Central Banker SaysEdith Balazs and Zoltan Simon
Hungarian policy makers will probably resume monetary easing next week in response to falling consumer prices that threaten their inflation target, central bank Managing Director Marton Nagy said.
“The way I see it, the Monetary Council is quite likely to cut” the main interest rate next Tuesday, Nagy, who’s not a member of the rate-setting body, said at a conference in Budapest on Friday. The panel will meet on March 24 to review borrowing costs.
The central bank, which targets an inflation rate of 3 percent in the medium term, is seeking to stem the biggest price drop since the 1960s. Policy makers have said they will consider restarting rate cuts in March after keeping their benchmark unchanged at a record-low 2.1 percent for a seventh month in February. Consumer prices fell 1 percent from a year earlier last month.
Sixteen of 18 economists in a Bloomberg survey forecast a rate decrease this month, with 13 analysts predicting a reduction to 1.9 percent. The central bank ended Europe’s longest uninterrupted easing cycle in August after reducing its main rate from 7 percent in 2012 in 24 consecutive steps.
The forint weakened 0.2 percent to 304.09 versus the euro by 1:59 p.m. in Budapest, paring its gain in the past month to 0.3 percent.
“The Monetary Council has recently repeatedly emphasized that inflation pressure is low and that threatens the 3 percent target,” Nagy said. “This may definitely make monetary easing necessary.”