Hungary’s central bank to continue easing cycle

Budapest, March 23 (MTI) – Hungary’s central bank (NBH) will cut the base rate until it reaches a rate that is consistent with its inflation target, NBH deputy governor Márton Nagy told journalists on Wednesday. The bank wants to keep rate the key rate low for a sustained period, he said.

The NBH’s inflation target is 3 percent in a +/-1 percentage-point tolerance band.

The forint weakened after Nagy’s comments, easing against the euro from 311.69 at 8am to 312.60.

Nagy’s comments came after the NBH cut the key rate by 15 basis points to 1.20 percent in a surprise move on Tuesday. The NBH halted its previous easing cycle in July 2015.

He said the bank wanted to surprise markets by launching a new easing cycle.

A second cut will certainly come, Dow Jones cited him as saying. The question is whether a third or fourth will follow, he said, adding he personally preferred 15 basis points reductions.