Hungarian MPC hints that case for rate cuts is building

The communiqué accompanying the Hungarian MPC’s decision to leave interest rates unchanged at 2.1% earlier today once again signalled that current monetary conditions are likely to stay in place for an “extended” period. Nonetheless, the MPC did acknowledge that, with the economy in deflation, pressures are building in favour of policy easing. For now, we haven’t put this into our forecast, but if the inflation data produce further downside surprises, a few interest rate cuts would seem likely.