Hungary Central Bank Flags More Easing as Rate Cut to Record
Bloomberg - Apr 21, 2015
Hungary’s central bank pledged to press on with monetary easing to spur price growth after reducing its benchmark interest rate for a second month to a record low.
The National Bank of Hungary cut the two-week deposit rate to 1.8 percent from 1.95 percent on Tuesday, matching the reduction in March and the forecasts of all but two of 23 economists in a Bloomberg survey. Easing may continue “as long as it supports†reaching the inflation goal, the rate-setting Monetary Council said in a statement on the bank’s website.
“The only uncertainty was whether the Monetary Council was going to maintain the pace†of rate cuts, Vivien Barczel and Gergely Urmossy, economists at Erste Group Bank AG’s Hungarian unit in Budapest, said by e-mail. They forecast that the main rate will drop below 1.5 percent in the second half of the year.
The central bank returned to monetary easing in March after a seven-month pause as deflation reached the deepest since the 1960s. Consumer prices dropped 0.6 percent in March, well below the bank’s 3 percent medium-term target.
Forint Strengthens
The forint has strengthened 1.9 percent against the euro since March 24, when policy makers cut the main rate by 15 basis points, or 0.15 percentage point, less than most economists in a Bloomberg survey had forecast. The currency traded at 297.7 to the euro at 3:17 p.m. in Budapest, the strongest since reaching a 15-month high on April 14.
