Hungarian central bank: big turnaround to come, forint reacts

The deputy governor of the Hungarian central bank (MNB) hinted at a conference in Vienna that an interest rate cut of up to 100 basis points could be on the cards from now on. The Hungarian forint also reacted to the statement.

On the basis of the information currently available, there are as many arguments for cutting interest rates by 75 basis points as there are for cutting them by 100 basis points at the end-January rate decision meeting, Barnabás Virág, the national bank’s deputy governor, told the Euromoney conference in Vienna, Portfolio reports, based on Reuters.

With this, the deputy governor of the MNB implied that the central bank can speed up the pace of monthly interest rate cuts.

The central bank has cut the base rate by 75 basis points in recent months. The deputy governor said that even if this acceleration happens, it will only be for a transitional period of one to three months.

Virág also said that current market pricing is realistic, suggesting that the base rate of the MNB could fall to 6-7 percent by mid-year from the current 10.75 percent, although he added that “I think it is too early to judge because it depends on the data”.

Portfolio pointed out that the forint also reacted to Barnabás Virág’s words: it weakened from 379.5 to over 381 against the euro.

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