Market News

Summary

• Base rate seen unchanged at 6.5>#/li###
• Median forecast sees one 25-bp rate cut this year
• Analysts split over room for easing this year
• Reuters Hungary central bank rate forecasts:
• Reuters Hungary average inflation forecasts:

BUDAPEST, Aug 22 (Reuters) - Hungary's central bank is expected to leave its base rate steady at 6.5% for the 11th consecutive month on Tuesday despite a sputtering recovery, as inflation exceeds the bank's 2% to 4% tolerance band even though price growth slowed last month.

All 21 analysts surveyed between August 18 and 22 projected that the National Bank of Hungary would leave its base rate unchanged at 6.5% at its meeting. The median projection still sees a 25-basis-point rate cut by the end of this year, although analysts were divided over the room for policy easing.

"We still do not expect any rate cuts this year, as the Monetary Council remains focused on tackling persistently high inflation expectations," ING analyst Peter Virovacz said, adding that the only game changer would be if geopolitical tensions eased as the result of a ceasefire between Russia and Ukraine.

The bank's governor, Mihaly Varga, reiterated in a statement on Friday that with inflation risks still pointing upwards, the bank would "place special emphasis on cautious and patient monetary policy and an anchoring of inflation expectations".
The bank left its base rate on hold at 6.5% in July.