Deflation to deepen in Jan ’15 – London analysts

Budapest (MTI) – Deflation in Hungary will continue to deepen in January next year and the central bank is likely to start cutting the base rate again from March, if the forint bounces back by then, London-based analysts said in their year-end forecast.

There are downward risks to the inflation forecast issued by the National Bank of Hungary (NBH), the analysts at JP Morgan said in the report published on Wednesday. The analysts projected an average inflation rate of 0.5 percent for the whole of 2015 and a slow increase from there in 2016.

Consumer prices are expected to be down an annual 0.8 percent in January 2015. In this climate the NBH could cut the base rate by 50 basis points in the first half of 2015, the report said.

Goldman Sachs analysts said the NBH held out with a rate cut in December only because it must have concern for the forint’s exchange rate due to its effect on central budget numbers until the end of the year. Goldman Sachs analysts also expect the central bank to cut the base rate from the current 2.1 percent by 50 basis points in 2015.

Analysts at Barclays expect a 60-basis-point cut in 2015, the report said.

Source: http://mtva.hu/hu/hungary-matters