Market concerns about Hungary’s fiscal performance seem exaggerated, creating room for the NBH to cut the base rate further, a major City-based investment group said.
In its latest Global Economic Weekly research note, Bank of America-Merrill Lynch introduced its new Monetary Conditions Indices (MCIs) for six major emerging markets including Hungary.
It shows that monetary conditions remain relatively tight in the CE-3 group as inflation in these countries remains much more subdued than in other emerging regions.
Against this background, the NBH is set to cut by another 125bp this year, also considering that market concerns about a fiscal slippage “are likely substantially overdone”, Bank of America-Merrill Lynch said.
In a chart attached to the report, it forecasts NBH’s policy rate to end the year at 4.50pc.