City: NBH to press on with rate cuts

Hungary’s central bank is set to press ahead with more rate cuts despite easing deflationary pressures, London-based emerging markets economists have said after a less negative-than-expected set of headline CPI data for March was released. Consumer prices dropped by an annual 0.6% last month against a consensus forecast average of -0.8% and a -1.0% headline print registered in February. Analysts at JP Morgan stressed that while the March outturn was higher than consensus, it was still “a tenth below our and the National Bank’s (NBH) forecast of -0.5p%”, and sustained forint appreciation increases the risk that the bank will cut the policy rate to below 1.5-1.6%. “Yet we do not expect the central bank to significantly increase the pace of easing, and continue to forecast cautious 15-20 basis point rate cut steps,” they added. “We expect inflation to accelerate to +1.8% (year-on-year) by year-end but remain below the 3% target through 2016 and likely into 2017.”