Hungary Set for Another Rate Cut as Inflation Stays Muted

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Or sign-in if you have an account.bq[4}vpa0b)l2v(x[)4rpz0w_media_dl_1.png Bloomberg(Bloomberg) — Hungary’s central bank is poised to lower borrowing costs for a second straight month as subdued inflation allows policymakers to press ahead with their monetary easing cycle.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountThe National Bank of Hungary will cut its benchmark interest rate by a quarter point to 5.75% on Tuesday, according to all 23 economists surveyed by Bloomberg. The decision is due at 2 p.m. in Budapest, followed by a statement and Governor Mihaly Varga’s press briefing an hour later.The move would follow June’s quarter-point reduction, when the central bank restarted easing after sharply lowering its inflation forecasts due to the forint’s appreciation. Varga said policymakers had room for two additional quarter-point cuts over the summer before reassessing conditions in September, when a new set of macroeconomic projections will be published.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againIncoming data reinforced that guidance, with annual inflation slowing to 1.7% in June from 1.8% a month earlier — below the central bank’s 2%-4% tolerance band for a second consecutive month. The forint’s appreciation after Prime Minister Peter Magyar’s election win over Viktor Orban in April, softer energy prices and subdued imported inflation continued to offset the gradual removal of government price-curbing measures. The new government’s pledge to pursue euro adoption has also supported the currency and helped compress government bond yields.Since last month’s rate decision, the forint has weakened nearly 2% against the euro amid escalation in the Iran war. That’s made the currency among the worst-performing globally and underscored landlocked Hungary’s heightened exposure to energy price swings.The depreciation is likely to bolster the cautious attitude of the central bank’s Monetary Council, which last month eschewed a proposal for a half-point key rate cut in favor of proceeding in quarter-point steps.Even after another 25-basis point reduction, Hungary would still have one of the highest benchmark interest rates in the European Union, leaving policymakers with scope to continue normalizing policy while maintaining a rate premium over peers including Poland and the Czech Republic.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.