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Breaking: Hungarian central bank cuts interest rates further, forint reacts – UPDATE
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As expected, the Hungarian central bank continues to slow down: it cut the base rate by 50 basis points to 7.75%, after a cut of 100 and then 75 basis points.
Hungarian central bank slows down
This continues the cycle of interest rate cuts, but at a slower pace than in previous months. According to Portfolio, monetary easing could come to a complete halt from the middle of the year.
The Hungarian central bank announced in March that it plans to cut interest rates by 50 basis points from April, slowing the pace of interest rate cuts from the 75-100 basis points of recent months. According to Portfolio, the slowdown is understandable from several points of view:
- The period of rapidly declining inflation has ended. From May onwards, the inflation rate is likely to remain above the central bank’s target range of 2-4% until the end of the year.
- The forint failed to stabilise at a stronger level, with the exchange rate against the euro stuck above 390, which worsens the inflation outlook.
- Interest rate cuts have brought yield levels in the region within reach, and Hungary’s risk premium relative to developed markets (especially the US) has continued to narrow.
As InfoStart reports, speaking on the sidelines of the last policy meeting, Barnabás Virág, vice-president of the central bank, said that the “rapid-action phase” of monetary policy has come to an end, with the pace of interest rate cuts slowing down in the second quarter and monetary policy entering a new phase.
How did the forint react?
On Monday, the forint ended the day around the opening level. On Tuesday, it started with a slight weakening, then dipped below the 394 level. After the 50-point cut, the exchange rate against the euro stands at around 393.50.
Information from the Hungarian News Agency (MTI)
The Council also decided to lower the symmetric interest rate corridor in tandem, bringing the O/N deposit rate to 6.75 percent and the O/N collateralised loan rate to 8.75 percent.
At the previous policy meeting in March, the Council cut the base rate by 75 basis points to 8.25 percent.
PRESSURIZATION growing on the entire Financial and Economic “landscape” of Hungary, plus on Infra-structure of our country, through a Fidesz/Government being in the “hellish” place of having NO Money, that they can use to BOLSTER or stabilize – the gargantuan MESS they have delivered us Hungary.
It will WORSEN.
Try as they MAY “fiddling” around with, which is ALL quite in-consequential – around with Interest Rates, but they are on a “Wing and a Prayer” – that sadly the “known” fact, that the “Power of Prayer” contains, in this case, the SAVING of further Economic & Financial – GLOOM – being suffered – by millions of in growing thousands of Hungarians, will not through the Central Bank, nor from the Desk of the Finance Minister – Mihaly Varga, who’s Ministerial “Report” Card, is APPALING, bring about any form of Stability to the Economic & Financial position, worsening in Hungary.