NBH deputy governor sees need for longer easing cycle

Budapest, April 3 (MTI) – National Bank of Hungary (NBH) deputy governor Adam Balog said in an interview with Reuters on Thursday that he believed the central bank’s new easing cycle needs to be longer.

“At this moment I definitely see a need for a longer easing cycle, taking into account that this (disinflationary risks) is a widespread risk, and at this moment we cannot see which scenario will actually materialise,” Balog said in the interview published on Friday. He also said that the forint’s recent firming pointed “in the direction of a longer, rather than shorter easing cycle”.

The NBH cut its key rate by 15 basis points to 1.95 percent at a policy meeting late last month. The cut was the first rate change since the NBH wound up an easing cycle last summer.

Balog said the new easing cycle would “definitely” consist of several steps, though not necessarily 15bp ones.

“I would not like the main message to be that (Hungarian rate cuts) will be always 15 basis points. Could be a bit bigger or a bit smaller,” he said.

Balog also said he could not rule out an extension beyond the end of 2015 of the NBH’s Funding for Growth Scheme, though it did not want to exceed the 2,000 billion forint (EUR 6.67bn) programme cap.