Hungary is likely to lower a key interest rate for the second straight month after central bankers signaled a retreat from a tightening cycle that brought borrowing costs to a European Union high.
(Bloomberg) — Hungary is likely to lower a key interest rate for the second straight month after central bankers signaled a retreat from a tightening cycle that brought borrowing costs to a European Union high.
The central bank in Budapest will reduce the overnight rate by a percentage point to 16% on Tuesday, according to all eight economists surveyed in a Bloomberg poll. The base interest rate is expected to remain steady at 13%.
The monetary authority cut the overnight rate for the first time in three years in May, as it began to dismantle a monetary regime aimed at halting a selloff in the forint and reining in record inflation. The central bank cited a “persistent improvement in risk perceptions” behind the move.
The base interest rate will be announced at 2 p.m. local time, followed by a statement and a press conference an hour later when the key rate decision is expected along with fresh projections.
The National Bank of Hungary will likely stand by its goal of aligning the overnight rate with the base rate, “with an emphasis on gradual” easing, Georgi Deyanov, a Morgan Stanley analyst, wrote in note.
Hungary has been struggling with a recession and the highest borrowing costs in the EU. Inflation on an annual basis has slowed for four months, while the forint has gained 7% against the euro since the start of this year.
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