Standard Chartered’s Saabir Salad notes that the National Bank of Hungary (MNB) cut the base rate by 25 bps to 6.00%, in line with expectations, and delivered notably dovish forward guidance. Salad highlights significantly lower Consumer Price Index (CPI) projections and a strong HUF, and now expects faster and deeper rate cuts, with the policy rate seen bottoming at 4.50%.

NBH resumes and accelerates easing cycle

"The National Bank of Hungary cut its interest rates by 25bps at its monetary policy meeting, in line with our expectation and the Bloomberg consensus."

"There were also explicit references in both the statement and Governor Varga’s presser to the possibility of further easing this year, with Varga signalling two additional cuts over the summer."

"We believe this marks the resumption of the NBH’s easing cycle, which had been delayed by the Middle East conflict."

"The central bank’s communication suggests rate cuts are likely to be faster and potentially deeper than we had previously expected."

"We now forecast the base rate to reach 5.25% by end-2026 (previously 5.75%)."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)